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Environmental Information Provision as a Public Policy Instrument

Author

Listed:
  • Petrakis Emmanuel

    (University of Crete)

  • Sartzetakis Eftichios Sophocles

    (University of Macedonia)

  • Xepapadeas Anastasios

    (University of Crete)

Abstract

We examine information provision as a public policy instrument when products generate damages to consumers as well as environmental externalities. We show that information provision dominates taxation in terms of welfare, if information can be provided at low cost. This is because a uniform tax alone levies a heavier than optimal burden on informed consumers and allows the uninformed consumer to free ride partially on the informed consumers' voluntary actions. If the cost of information provision is substantial, taxation is welfare superior. A policy regime that combines information provision and taxation leads to higher welfare relative to the use of either instrument alone.

Suggested Citation

  • Petrakis Emmanuel & Sartzetakis Eftichios Sophocles & Xepapadeas Anastasios, 2005. "Environmental Information Provision as a Public Policy Instrument," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-31, November.
    • Handle: RePEc:bpj:bejeap:v:contributions.4:y:2005:i:1:n:14
    DOI: 10.2202/1538-0645.1365
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    1. Bárbara Christina Pereira Da Silva Carrijo & Sandro Eduardo Monsueto & Larissa Barbosa Cardoso, 2020. "The first job and occupational trajectories: young workers in Brazil between 2002 and 2016," International Review of Applied Economics, Taylor & Francis Journals, vol. 34(2), pages 235-251, March.
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    Cited by:

    1. Eftichios Sartzetakis & Anastasios Xepapadeas & Emmanuel Petrakis, 2012. "The Role of Information Provision as a Policy Instrument to Supplement Environmental Taxes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 52(3), pages 347-368, July.
    2. Sartzetakis, Eftichis & Xepapadeas, Anastasios & Petrakis, Emmanuel, 2008. "The role of information provision as a policy instrument to supplement environmental taxes: Empowering consumers to choose optimally," MPRA Paper 12083, University Library of Munich, Germany.
    3. Andrea Podhorsky, 2009. "Environmental Labeling," Working Papers 2009_3, York University, Department of Economics.
    4. Simon Levin & Anastasios Xepapadeas, 2021. "On the Coevolution of Economic and Ecological Systems," Annual Review of Resource Economics, Annual Reviews, vol. 13(1), pages 355-377, October.
    5. Aditi Sengupta, 2010. "Signaling environmental quality to green consumers and the incentive to invest in cleaner technology: Effect of environmental regulation," Departmental Working Papers 1001, Southern Methodist University, Department of Economics.
    6. Dorothée Brécard & Mireille Chiroleu-Assouline, 2024. "Information campaigns and ecolabels by environmental NGOs: Effective strategies to eliminate environmentally harmful components?," Post-Print hal-04592469, HAL.
    7. Allard Made, 2014. "Information Provision by Interest Groups," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(4), pages 649-664, August.
    8. Andrea Podhorsky, 2020. "Environmental certification programs: How does information provision compare with taxation?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(6), pages 1772-1800, December.
    9. Giovanni Immordino & Anna Maria C. Menichini & Maria Grazia Romano, 2022. "Education, taxation and the perceived effects of sin good consumption," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(4), pages 985-1013, August.
    10. Sartzetakis, Eftichios & Xepapadeas, Anastasios & Yannacopoulos, Athanasios N., 2023. "Environmental regulation with preferences for social status," Ecological Economics, Elsevier, vol. 209(C).
    11. Pallab Mozumder & Ryan Helton & Robert P. Berrens, 2009. "Provision of a Wildfire Risk Map: Informing Residents in the Wildland Urban Interface," Risk Analysis, John Wiley & Sons, vol. 29(11), pages 1588-1600, November.
    12. Jesse Matheson, 2011. "Prices and social behavior: A study of adult smoking in Canadian Aboriginal communities," Discussion Papers in Economics 11/50, Division of Economics, School of Business, University of Leicester, revised Dec 2012.
    13. Sengupta, Aditi, 2015. "Competitive investment in clean technology and uninformed green consumers," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 125-141.
    14. Dorothée Brécard & Mireille Chiroleu-Assouline, 2020. "The market for "harmful component-free" products under pressure from the NGOs," PSE Working Papers halshs-02878337, HAL.
    15. Chiradip Chatterjee & Pallab Mozumder, 2014. "Understanding Household Preferences for Hurricane Risk Mitigation Information: Evidence from Survey Responses," Risk Analysis, John Wiley & Sons, vol. 34(6), pages 984-996, June.
    16. Lucie Bottega & Jenny De Freitas, 2009. "Public, Private and Nonprofit Regulation for Environmental Quality," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 105-123, March.
    17. Sengupta, Aditi, 2012. "Investment in cleaner technology and signaling distortions in a market with green consumers," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 468-480.
    18. Gil-Moltó, Maria José & Varvarigos, Dimitrios, 2013. "Emission taxes and the adoption of cleaner technologies: The case of environmentally conscious consumers," Resource and Energy Economics, Elsevier, vol. 35(4), pages 486-504.
    19. Lehmann, Paul, 2008. "Using a Policy Mix for Pollution Control – A Review of Economic Literature," MPRA Paper 21354, University Library of Munich, Germany.
    20. Kallbekken, Steffen & Westskog, Hege & Mideksa, Torben K., 2010. "Appeals to social norms as policy instruments to address consumption externalities," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(4), pages 447-454, August.
    21. Eleni Stathopoulou & Luis Gautier, 2019. "Green Alliances and the Role of Taxation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(3), pages 1189-1206, November.
    22. Christos Constantatos & Christos Pargianas & Eftichios S. Sartzetakis, 2021. "Green consumers and environmental policy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(1), pages 105-140, February.

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      More about this item

      Keywords

      information provision; environmental taxation; individual and external damages; differentiated goods;
      All these keywords.

      JEL classification:

      • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
      • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
      • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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