Energy Efficiency Standards Are More Regressive Than Energy Taxes: Theory and Evidence

Arik Levinson

Working Papers from Georgetown University, Department of Economics

Abstract: Economists endorse taxes as a cost-effective means of reducing pollution. But policymakers raise concerns about their regressivity, or disproportional burden on poorer families, preferring instead to regulate energy efficiency. I first show that in theory, energy efficiency standards are more regressive than energy taxes, not less. I then provide an example using data on automobiles in the United States. Taxing gas would be less regressive than regulating the fuel economy of cars if the two policies are compared on a revenue-equivalent basis.

Keywords: Pigouvian tax; performance standards; pollution (search for similar items in EconPapers)
JEL-codes: H23 (search for similar items in EconPapers)
Pages: 35
Date: 2018-08-15
New Economics Papers: this item is included in nep-ene, nep-pub, nep-reg and nep-tre
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Energy Efficiency Standards Are More Regressive Than Energy Taxes: Theory and Evidence (2019)
Working Paper: Energy Efficiency Standards Are More Regressive Than Energy Taxes: Theory and Evidence (2017)
Chapter: Energy Efficiency Standards Are More Regressive Than Energy Taxes: Theory and Evidence (2016)
Working Paper: Energy Efficiency Standards Are More Regressive Than Energy Taxes: Theory and Evidence (2016)
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