Environmental taxation: a green stick or a green carrot for corporate social performance?

Alain Verbeke and Chris Coeck
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Alain Verbeke: Solvay Business School, Free University Brussels (VUB), Pleinlaan 2, B-1050 Brussels, Belgium, Postal: Solvay Business School, Free University Brussels (VUB), Pleinlaan 2, B-1050 Brussels, Belgium
Chris Coeck: Faculty of Applied Economics, University Centre of Antwerp (RUCA), Middelheimlaan 1, B-2020 Antwerp, Belgium, Postal: Faculty of Applied Economics, University Centre of Antwerp (RUCA), Middelheimlaan 1, B-2020 Antwerp, Belgium

Managerial and Decision Economics, 1997, vol. 18, issue 6, 507-516

Abstract: Environmental taxes have recently become a popular tool of environmental policy in many countries. Their increased use reflects the belief that taxes provide stronger incentives than conventional (physical) regulation. In addition, a system of environmental taxes may also lead to increased funding for government programmes.

This paper develops a management oriented conceptual framework for analysing the impact of environmental taxes on corporate social performance. One of the main conclusions arising from this framework is that an environmental taxation system may lead to an unintended reduction of the affected firms' willingness to respect and support public environmental policies. As a result, environmental taxes may lead to perverse incentives and emerging strategies of cheating behaviour in the long run. © 1997 John Wiley & Sons, Ltd.

Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:18:y:1997:i:6:p:507-516

DOI: 10.1002/(SICI)1099-1468(199709)18:6<507::AID-MDE850>3.0.CO;2-1

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