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The social multiplier of environmental policy: Application to carbon taxation.
- Source :
-
Journal of Environmental Economics & Management . Jan2021, Vol. 105, pN.PAG-N.PAG. 1p. - Publication Year :
- 2021
-
Abstract
- We analyze the effectiveness of environmental policy when consumers are subject to social influence. To this end, we build a model of consumption decisions driven by socially-embedded preferences formed under the influence of peers in a social network. This setting gives rise to a social multiplier of environmental policy. In an application to climate change, we derive Pigouvian and target-achieving carbon taxes under socially-embedded preferences. Under realistic assumptions the social multiplier is equal to 1.30, allowing to reduce the effective tax by 38%. We show that the multiplier depends on four factors: strength of social influence, initial taste distribution, network topology and income distribution. The approach provides a basis for rigorously analyzing a transition to low-carbon lifestyles and identifying complementary information and network policies to maximize the effectiveness of carbon taxation. [ABSTRACT FROM AUTHOR]
- Subjects :
- *CARBON pricing
*CARBON taxes
*ENVIRONMENTAL policy
*SOCIAL networks
*CLIMATE change
Subjects
Details
- Language :
- English
- ISSN :
- 00950696
- Volume :
- 105
- Database :
- Academic Search Index
- Journal :
- Journal of Environmental Economics & Management
- Publication Type :
- Academic Journal
- Accession number :
- 147929566
- Full Text :
- https://doi.org/10.1016/j.jeem.2020.102396