The impact of trial runs on the acceptability of environmental taxes: Experimental evidence

Todd Cherry, Steffen Kallbekken and Stephan Kroll

Resource and Energy Economics, 2014, vol. 38, issue C, 84-95

Abstract: This paper examines the political difficulty of enacting welfare-enhancing environmental taxes. Using referenda in a market experiment with externalities, we investigate the effect of trial periods on the acceptability of two theoretically equivalent Pigouvian tax schemes. While implementing either tax is in subjects’ material self-interest, we find significant levels of opposition to both schemes, though the level differs considerably. Results show that trial runs can overcome initial tax aversion, which is robust across schemes, but a trial with one scheme does not affect the acceptability of the other. Trial periods also mitigate initial biases in preferences of alternative tax schemes.

Keywords: Pigouvian tax; Experiments; Tax aversion; Experience; Behavioural economics (search for similar items in EconPapers)
JEL-codes: C92 D62 H23 Q58 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:38:y:2014:i:c:p:84-95

DOI: 10.1016/j.reseneeco.2014.06.005

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