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Environmental taxation: a green stick or a green carrot for corporate social performance?

Author

Listed:
  • Alain Verbeke

    (Solvay Business School, Free University Brussels (VUB), Pleinlaan 2, B-1050 Brussels, Belgium)

  • Chris Coeck

    (Faculty of Applied Economics, University Centre of Antwerp (RUCA), Middelheimlaan 1, B-2020 Antwerp, Belgium)

Abstract

Environmental taxes have recently become a popular tool of environmental policy in many countries. Their increased use reflects the belief that taxes provide stronger incentives than conventional (physical) regulation. In addition, a system of environmental taxes may also lead to increased funding for government programmes. This paper develops a management oriented conceptual framework for analysing the impact of environmental taxes on corporate social performance. One of the main conclusions arising from this framework is that an environmental taxation system may lead to an unintended reduction of the affected firms' willingness to respect and support public environmental policies. As a result, environmental taxes may lead to perverse incentives and emerging strategies of cheating behaviour in the long run. © 1997 John Wiley & Sons, Ltd.

Suggested Citation

  • Alain Verbeke & Chris Coeck, 1997. "Environmental taxation: a green stick or a green carrot for corporate social performance?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 18(6), pages 507-516.
    • Handle: RePEc:wly:mgtdec:v:18:y:1997:i:6:p:507-516
    DOI: 10.1002/(SICI)1099-1468(199709)18:6<507::AID-MDE850>3.0.CO;2-1
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    Cited by:

    1. Nakamura, Masao & Takahashi, Takuya & Vertinsky, Ilan, 2001. "Why Japanese Firms Choose to Certify: A Study of Managerial Responses to Environmental Issues," Journal of Environmental Economics and Management, Elsevier, vol. 42(1), pages 23-52, July.
    2. Sanjay Sharma, 2001. "Different strokes: regulatory styles and environmental strategy in the North‐American oil and gas industry," Business Strategy and the Environment, Wiley Blackwell, vol. 10(6), pages 344-364, November.
    3. Dorothy Wood & Donald G. Ross, 2006. "Environmental social controls and capital investments: Australian evidence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 46(4), pages 677-695, December.
    4. Jacobsen, Catrine & Piovesan, Marco, 2016. "Tax me if you can: An artifactual field experiment on dishonesty," Journal of Economic Behavior & Organization, Elsevier, vol. 124(C), pages 7-14.

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