Morals and the Political Economy of Corrective Taxes

Felix Bierbrauer (), Mattias Polborn (), Marten Ritterrath () and Georg Weizsäcker ()
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Felix Bierbrauer: University of Cologne
Mattias Polborn: Vanderbilt University
Marten Ritterrath: VATT Institute for Economic Research & University of Cologne
Georg Weizsäcker: Humboldt-Universität zu Berlin

No 419, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: We study the political economy of carbon taxes when neoclassical consumers take all other agents' emissions as given and socially responsible consumers internalize damages in a group-rule-utilitarian way, taking neoclassical consumers' behavior as given. We characterize political equilibrium taxes with a focus on deviations from first-best Pigouvian taxation. Welfare falls further if arguments on moral obligations to reduce carbon footprints polarize the debate in society. Finally, we present survey evidence that supports our theory: social responsibility correlates with lower consumption of brown goods, higher preferred carbon taxes, and support for moral arguments.

Keywords: Political economy of taxation; carbon taxes; ethical behavior; moral dissent (search for similar items in EconPapers)
JEL-codes: C9 D11 D72 H23 (search for similar items in EconPapers)
Pages: 83 pages
Date: 2026-06
New Economics Papers: this item is included in nep-hpe and nep-mac
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