Discriminatory tax and subsidy on environmental behaviors

This paper investigates the consumption tax and subsidy as an environmental policy instrument for environmentally aware consumers by applying the model of price discrimination. We discover that a higher rate of subsidy should be set for less eco-friendly consumers for the purpose of achieving social...

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Bibliographic Details
Published inEnvironmental economics and policy studies Vol. 21; no. 1; pp. 25 - 36
Main Author Wada, Yoshinori
Format Journal Article
LanguageEnglish
Published Tokyo Springer Japan 01.01.2019
Springer Nature B.V
Subjects
Automobile industry
Automobiles
Consumers
Crowding
Discrimination
Economic models
Economics
Economics and Finance
Environmental behavior
Environmental Economics
Environmental policy
Externality
Motor car industry
Motor cars
Prosocial behavior
Research Article
Social Policy
Stocking density
Subsidies
Taxation
Use taxes
Externalities
Incentives
D86
Environmental awareness
Q58
D03
H23
Pigouvian tax/subsidy
L12
Price discrimination
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Summary:This paper investigates the consumption tax and subsidy as an environmental policy instrument for environmentally aware consumers by applying the model of price discrimination. We discover that a higher rate of subsidy should be set for less eco-friendly consumers for the purpose of achieving socially optimal environmental qualities under positive externalities and this retrogressive subsidization differs from the current progressive subsidization in the Japanese automobile industry, and could alleviate crowding out effects on prosocial behavior. Moreover, it is revealed that the optimal policy instrument for eco-friendlier consumers shifts from a subsidy to a tax, as the level of negative externalities increases.
ISSN:1432-847X
1867-383X
DOI:10.1007/s10018-018-0220-2