Horizontal Equity Effects in Energy Regulation

Carolyn Fischer and William Pizer

No 24033, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D61 D63 Q48 Q52 Q58 (search for similar items in EconPapers)
Date: 2017-11
New Economics Papers: this item is included in nep-ene
Note: EEE
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Citations: View citations in EconPapers (1)

Published as Horizontal Equity Effects in Energy Regulation , Carolyn Fischer, William A. Pizer. in Energy Policy Tradeoffs between Economic Efficiency and Distributional Equity , Deryugina, Fullerton, and Pizer. 2019
Published as Carolyn Fischer & William A. Pizer, 2019. "Horizontal Equity Effects in Energy Regulation," Journal of the Association of Environmental and Resource Economists, vol 6(S1), pages S209-S237.

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Chapter: Horizontal Equity Effects in Energy Regulation (2016)
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