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Prices, Politics And Persuasion: The Case Of Pollution Control And Clean Technology Adoption

Author

Listed:
  • WENLI CHENG

    (Department of Economics, Monash University, Clayton, VIC 3800, Australia)

  • DINGSHENG ZHANG

    (IAS and Economics and Management School (EMS), Wuhan University, Wuchang District, Wuhan, Hubei 430072, P. R. China3CEMA, Central University of Finance and Economics, 39 South College Road, Haidian District, Beijing 100081, P. R. China)

Abstract

This paper presents three simple models to study how prices, politics and persuasion may each play a role in environmental policy-making. 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 pollution-generating goods.

Suggested Citation

  • Wenli Cheng & Dingsheng Zhang, 2024. "Prices, Politics And Persuasion: The Case Of Pollution Control And Clean Technology Adoption," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 69(05), pages 1685-1695, September.
    • Handle: RePEc:wsi:serxxx:v:69:y:2024:i:05:n:s0217590823420018
    DOI: 10.1142/S0217590823420018
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    Keywords

    Pollution permits; increasing returns; advertising;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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