Horizontal Equity Effects in Energy Regulation

Carolyn Fischer and William Pizer

Journal of the Association of Environmental and Resource Economists, 2019, vol. 6, issue S1, S209 - S237

Abstract: Choices in energy regulation, particularly whether and how to price externalities, can have widely different distributional consequences both across and within income groups. Traditional welfare theory focuses largely on effects across income groups; such "vertical equity" concerns can typically be addressed by a progressive redistribution of emissions revenues. In this paper, we review alternative economic perspectives that give rise to equity concerns within income groups, or "horizontal equity," and suggest operational measures. We then apply those measures to a stylized model of pollution regulation in the electricity sector. In addition, we look for ways to present the information behind those measures directly to stakeholders. We show how horizontal equity concerns might overshadow efficiency concerns in this context.

Date: 2019
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Related works:
Working Paper: Horizontal Equity Effects in Energy Regulation (2017)
Chapter: Horizontal Equity Effects in Energy Regulation (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ucp:jaerec:doi:10.1086/701192

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