By the same authors

Monopoly Emission Taxation and Compliance when Consumers are Green

Research output: Working paperDiscussion paper

Standard

Monopoly Emission Taxation and Compliance when Consumers are Green. / Datta, Bipasa; Hosokawa, Mitsuyuki.

2018.

Research output: Working paperDiscussion paper

Harvard

Datta, B & Hosokawa, M 2018 'Monopoly Emission Taxation and Compliance when Consumers are Green'.

APA

Datta, B., & Hosokawa, M. (2018). Monopoly Emission Taxation and Compliance when Consumers are Green.

Vancouver

Datta B, Hosokawa M. Monopoly Emission Taxation and Compliance when Consumers are Green. 2018.

Author

Datta, Bipasa ; Hosokawa, Mitsuyuki. / Monopoly Emission Taxation and Compliance when Consumers are Green. 2018.

Bibtex - Download

@techreport{60d253a69b7d40b696e2e4d3b9c543f4,
title = "Monopoly Emission Taxation and Compliance when Consumers are Green",
abstract = "This paper examines how a monopolist{\textquoteright}s production and emission decisions and its incentives to evade emission taxes are affected by the degree of consumers{\textquoteright} environmental awareness. Producing a low-emission eco-friendly product is costly for the monopolist with the marginal production cost being an inverse function of the level of emission. Consumers cannot verify the environmental attributes of the product (except for reading the labels!). Heterogeneousconsumers are characterised by an environmental awareness parameter proportional to the emission level that is distributed uniformly over a certain range. In this framework, we find several strong results. First, regardless of any emission taxes, the monopoly emission level declines and approaches the social optimal as consumers become more environmentally conscious althoughgreen consumerism alone cannot guarantee the socially-optimal level of emission. Second, even with a perfectly observable emission level, the (2nd best) optimal tax can be higher, equal or lower than the Pigouvian tax (in contrast to Barnett (1980)) depending upon the degree of consumers{\textquoteright} awareness. Third, the higher the degree of awareness, stronger is the deterrent effect of auditstrategies on the monopolist{\textquoteright}s incentives for tax evasion. A strong policy implication emerges from our analysis: given the government{\textquoteright}s budget constraint, resources should be allocated to promoting environmental awareness rather than to costly auditing. JEL codes: D42; H23; H26; L12",
keywords = "Emission taxation, enviromentally-friendly consumers, monopoly, auditing",
author = "Bipasa Datta and Mitsuyuki Hosokawa",
year = "2018",
language = "English",
type = "WorkingPaper",

}

RIS (suitable for import to EndNote) - Download

TY - UNPB

T1 - Monopoly Emission Taxation and Compliance when Consumers are Green

AU - Datta, Bipasa

AU - Hosokawa, Mitsuyuki

PY - 2018

Y1 - 2018

N2 - This paper examines how a monopolist’s production and emission decisions and its incentives to evade emission taxes are affected by the degree of consumers’ environmental awareness. Producing a low-emission eco-friendly product is costly for the monopolist with the marginal production cost being an inverse function of the level of emission. Consumers cannot verify the environmental attributes of the product (except for reading the labels!). Heterogeneousconsumers are characterised by an environmental awareness parameter proportional to the emission level that is distributed uniformly over a certain range. In this framework, we find several strong results. First, regardless of any emission taxes, the monopoly emission level declines and approaches the social optimal as consumers become more environmentally conscious althoughgreen consumerism alone cannot guarantee the socially-optimal level of emission. Second, even with a perfectly observable emission level, the (2nd best) optimal tax can be higher, equal or lower than the Pigouvian tax (in contrast to Barnett (1980)) depending upon the degree of consumers’ awareness. Third, the higher the degree of awareness, stronger is the deterrent effect of auditstrategies on the monopolist’s incentives for tax evasion. A strong policy implication emerges from our analysis: given the government’s budget constraint, resources should be allocated to promoting environmental awareness rather than to costly auditing. JEL codes: D42; H23; H26; L12

AB - This paper examines how a monopolist’s production and emission decisions and its incentives to evade emission taxes are affected by the degree of consumers’ environmental awareness. Producing a low-emission eco-friendly product is costly for the monopolist with the marginal production cost being an inverse function of the level of emission. Consumers cannot verify the environmental attributes of the product (except for reading the labels!). Heterogeneousconsumers are characterised by an environmental awareness parameter proportional to the emission level that is distributed uniformly over a certain range. In this framework, we find several strong results. First, regardless of any emission taxes, the monopoly emission level declines and approaches the social optimal as consumers become more environmentally conscious althoughgreen consumerism alone cannot guarantee the socially-optimal level of emission. Second, even with a perfectly observable emission level, the (2nd best) optimal tax can be higher, equal or lower than the Pigouvian tax (in contrast to Barnett (1980)) depending upon the degree of consumers’ awareness. Third, the higher the degree of awareness, stronger is the deterrent effect of auditstrategies on the monopolist’s incentives for tax evasion. A strong policy implication emerges from our analysis: given the government’s budget constraint, resources should be allocated to promoting environmental awareness rather than to costly auditing. JEL codes: D42; H23; H26; L12

KW - Emission taxation, enviromentally-friendly consumers, monopoly, auditing

M3 - Discussion paper

BT - Monopoly Emission Taxation and Compliance when Consumers are Green

ER -