Morals and the political economy of corrective taxes

Felix Bierbrauer, Mattias Polborn, Marten Ritterrath and Weizsäcker, Georg

No 21647, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the political economy of carbon taxes when neoclassical consumers take all other agents' emissions as given and socially responsible consumers internalize damages in a group-rule-utilitarian way, taking neoclassical consumers' behavior as given. We characterize political equilibrium taxes with a focus on deviations from first-best Pigouvian taxation. Welfare falls further if arguments on moral obligations to reduce carbon footprints polarize the debate in society. Finally, we present survey evidence that supports our theory: social responsibility correlates with lower consumption of brown goods, higher preferred carbon taxes, and support for moral arguments.

JEL-codes: C9 D11 D72 H23 (search for similar items in EconPapers)
Date: 2026-06
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