Prices, Politics and Persuasion: The Case of Pollution Control and Clean Technology Adoption

Wenli Cheng, Dingsheng Zhang and CEMA, Central University of Finance and Economics CEMA, Central University of Finance and Economics

No 26-13, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: This paper presents three simple models to study how prices, politics and persuasion may each play a role in environmental policymaking. Our conclusions are twofold. First, in the absence of increasing returns, requiring the polluting industry to purchase pollution permits can internalize the negative externality of pollution, and the optimal price of pollution permits should increase with the disutility of pollution. Second, with increasing returns in the industry using clean technologies, it is welfare enhancing to complement the pollution permits policy with a tax-funded subsidy to the clean industry, or with a tax-funded public campaign to persuade consumers to move away from the pollution generating goods.

Keywords: pollution permits, increasing returns; advertising (search for similar items in EconPapers)
JEL-codes: D83 H23 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2013-07
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
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Related works:
Journal Article: PRICES, POLITICS AND PERSUASION: THE CASE OF POLLUTION CONTROL AND CLEAN TECHNOLOGY ADOPTION (2024)
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