 Comparing the effectiveness of market-based and choice-based environmental policyJournal of Policy Modeling, 2020, vol. 42, issue 1, 173-191 Abstract: This paper examines the welfare effects of market-based (permits, taxes) and choice-based (voluntary emission certifications, eco-labels) environmental policy. My analysis shows that choice-based eco-labels can be a welfare-improving policy. However, these welfare gains occur through “green” consumer surplus as opposed to (social benefiting) emission reductions while emission taxes and permits increase welfare by causing “dirtier” or less efficient firms to leave the market. Although greater environmental conscientiousness makes eco-labeling an effective tool to improve overall welfare, eco-labels are not as effective at reducing environmental damage relative to traditional market-based emission taxes or permits. Using research on consumer preferences and previously implemented environmental policies, the effectiveness of traditional emission taxes and eco-labeling programs are estimated. The results suggest that consumers participation in the eco-labeled product market benefits producers, but overall, eco-labeling programs are an inefficient policy tool relative to traditional market-based emission taxes or permits. Keywords: Emission taxes; Environmental policy; Eco-labeling (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:42:y:2020:i:1:p:173-191 DOI: 10.1016/j.jpolmod.2019.07.006 Access Statistics for this article Journal of Policy Modeling is currently edited by A. M. Costa More articles in Journal of Policy Modeling from Elsevier |
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