nep-res New Economics Papers
on Resource Economics
Issue of 2018‒03‒05
three papers chosen by

  1. Emissions Trading Subject to Kantian Preferences By Hennlock, Magnus; Löfgren, Åsa; Sterner, Thomas; Martinsson, Peter
  2. Environmental investment decisions: experimental evidence of team versus individual decision making By Felgendreher, Simon; Hennlock, Magnus; Löfgren, Åsa; Wollbrant, Conny
  3. Energy Tax Reform and Poverty Alleviation in Mexico By José M. Labeaga; Xavier Labandeira; Xiral López-Otero

  1. By: Hennlock, Magnus (IVL Swedish Environmental Research Institute); Löfgren, Åsa (Department of Economics, School of Business, Economics and Law, Göteborg University); Sterner, Thomas (Department of Economics, School of Business, Economics and Law, Göteborg University); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We study a cap-and-trade market equilibrium where different regions belonging to an emissions trading regime have different ambitions about the stringency of the cap. Specifically, we introduce a segment of consumers with Kantian preferences and show that they would prefer a more stringent cap compared to other regions. When a region sets up a voluntary more stringent cap within a cap-and-trade market, dual carbon markets with dual prices on allowances can emerge with trade against both caps. We then show that labelling a subset of the allowances in a cap-and-trade market captures the higher willingness to pay driven by different ambition levels among agents within a trading scheme. We show under what circumstances a socially efficient outcome from carbon markets can be achieved by labelling allowances when there are heterogeneous preferences among regions about the ambition level in an emissions trading regime. Being voluntary, trade in labelled allowances is consistent with a bottom-up approach where efforts are built up gradually by actors, countries and regions that wants to take leadership in international climate policy.
    Keywords: emissions trading; emissions allowances; carbon markets; public goods; ethics; Kant
    JEL: D03 D62 D63 Q54
    Date: 2018–01
  2. By: Felgendreher, Simon (Department of Economics, School of Business, Economics and Law, Göteborg University); Hennlock, Magnus (olicy and Economy, IVL Swedish Environmental Research Institute); Löfgren, Åsa (Department of Economics, School of Business, Economics and Law, Göteborg University); Wollbrant, Conny (Department of Economics, University of Stirling)
    Abstract: We study experimentally how investment decisions are affected by equally stringent but different policy regime treatments and how differences depend on whether decisions are made individually or in groups. In our experiment, subjects decide on an investment level either individually or jointly in groups of three. In addition, decisions are made subject to either a tax or performance standard treatment. We find that investments are significantly higher and closer to the level that maximizes revenues of the hypothetical firm in the performance standard treatment. This holds for both individual and group decisions, but we find no evidence of an interaction effect. Even though groups seem to have a knowledge advantage, they are not able to benefit from it, since intragroup communication is not able to transmit the microeconomic reasoning to group members without such knowledge. Also, groups are not able to attenuate the attention bias of focusing on selective information depending on the specific policy treatment.
    Keywords: group behavior; investment inefficiencies; policy instruments
    JEL: C92 D70 H32
    Date: 2018–01
  3. By: José M. Labeaga; Xavier Labandeira; Xiral López-Otero
    Abstract: Equity and efficiency are crucial issues behind any tax reform, but they are particularly relevant in countries with high inequality and large shares of poverty. This paper provides a comprehensive socio-economic empirical assessment of Mexico’s recently implemented tax reforms in the energy domain, and of a hypothetical (partial) removal of existing electricity subsidies. Using the rich National Household Income and Expenditure Survey within the context of a demand system adjustment of non-durable goods, this article provides the publicrevenue, environmental and distributional impacts from the simulation of different combinations of energy taxation, subsidyremoval and distributive offsets.
    Keywords: Distribution; equity; emissions; subsidy
    JEL: D12 D31 H23 Q48
    Date: 2018–01

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