 Environmental certification programs: How does information provision compare with taxation?Andrea Podhorsky Journal of Public Economic Theory, 2020, vol. 22, issue 6, 1772-1800 Abstract: This paper develops a monopolistic competition framework to assess whether environmental certification programs can serve as effective substitutes for more traditional policy instruments such as environmental taxation or a minimum quality standard (MQS). I show that if firms can organize themselves and choose the certification standard collectively, then there is a beneficial role for a regulator to intervene. Also, the degree of substitution between differentiated goods that impose environmental damage and a “clean” outside good, the degree of competition in the industry and the extent of environmental damage caused by minimal quality goods are important considerations in the choice between a certification program and a tax or a MQS. While the comparison between a certification program and a tax depends on numerous factors, I find unequivocally that certification is a poor substitute for taxation whenever the outside good is a close substitute for differentiated goods, there is a high degree of competition in the industry or if minimal quality goods impose considerable environmental damage. Date: 2020 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jpbect:v:22:y:2020:i:6:p:1772-1800 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders More articles in Journal of Public Economic Theory from Association for Public Economic Theory Contact information at EDIRC. |
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