In this paper we compare two policy instruments that can be adopted to curb carbon emissions. The first is a conventional pollution tax, the second is an environmental campaign raising consumers’ awareness about the relative impact of their consumption choices. The comparison is carried out in two different scenarios, depending on whether consumers’ aprioristic preferences are such that they value the environmental attribute of a product (environmental quality) or its pure performance (hedonic quality) . In the case of environmental quality, the campaign is preferred under some specific conditions based on consumer heterogeneity, cost-effective analysis, and pollution level. On the contrary, the pollution tax is always preferred in the case of hedonic quality. Therefore, we show that the relative efficiency of the two policy instruments crucially depends on consumers’ initial concern for the environment, which may vary across countries due to socio-economic conditions.

Environmental vs hedonic quality: which policy can help in lowering pollution emissions? / Andrea, Mantovani; Cecilia, Vergari. - In: ENVIRONMENT AND DEVELOPMENT ECONOMICS. - ISSN 1355-770X. - STAMPA. - 22:(2017), pp. 274-304. [10.1017/S1355770X16000371]

Environmental vs hedonic quality: which policy can help in lowering pollution emissions?

MANTOVANI, ANDREA;VERGARI, CECILIA
2017

Abstract

In this paper we compare two policy instruments that can be adopted to curb carbon emissions. The first is a conventional pollution tax, the second is an environmental campaign raising consumers’ awareness about the relative impact of their consumption choices. The comparison is carried out in two different scenarios, depending on whether consumers’ aprioristic preferences are such that they value the environmental attribute of a product (environmental quality) or its pure performance (hedonic quality) . In the case of environmental quality, the campaign is preferred under some specific conditions based on consumer heterogeneity, cost-effective analysis, and pollution level. On the contrary, the pollution tax is always preferred in the case of hedonic quality. Therefore, we show that the relative efficiency of the two policy instruments crucially depends on consumers’ initial concern for the environment, which may vary across countries due to socio-economic conditions.
2017
Environmental vs hedonic quality: which policy can help in lowering pollution emissions? / Andrea, Mantovani; Cecilia, Vergari. - In: ENVIRONMENT AND DEVELOPMENT ECONOMICS. - ISSN 1355-770X. - STAMPA. - 22:(2017), pp. 274-304. [10.1017/S1355770X16000371]
Andrea, Mantovani; Cecilia, Vergari
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/588992
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