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Environmental policy and the energy efficiency of vertically differentiated consumer products

Magdalena Brzeskot and Alexander Haupt ()

Energy Economics, 2013, vol. 36, issue C, 444-453

Abstract: We analyse optimal environmental policies in a market that is vertically differentiated in terms of the energy efficiency of products. Considering energy taxes, subsidies to firms for investment in more eco-friendly products, and product standards, we are particularly interested in how distributional goals in addition to environmental goals shape the choice of policy instruments. We find that an industry-friendly government levies an energy tax to supplement a lax product standard, but shies away from subsidies to firms. By contrast, a consumer-friendly government relies heavily on a strict product standard and additionally implements a moderate subsidy to firms, but avoids energy taxes.

Keywords: Energy tax; Energy efficiency standard; Subsidy; Vertically differentiated markets; Product quality (search for similar items in EconPapers)
JEL-codes: Q58 Q48 L13 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:36:y:2013:i:c:p:444-453

DOI: 10.1016/j.eneco.2012.09.018

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