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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Friebel, Guido / Mendola, Mariapia / Requate, Till / Tsui, Kevin / Wichardt, Philipp / Zulehner, Christine

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Environmental Information Provision as a Public Policy Instrument

Emmanuel Petrakis1 / Eftichios Sophocles Sartzetakis2 / Anastasios Xepapadeas3

1University of Crete,

2University of Macedonia,

3University of Crete,

Citation Information: Contributions in Economic Analysis & Policy. Volume 4, Issue 1, ISSN (Online) 1538-0645, DOI: 10.2202/1538-0645.1365, November 2005

Publication History

Published Online:
2005-11-14

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.

Keywords: information provision; environmental taxation; individual and external damages; differentiated goods

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[1]
Allard van der Made
Environmental and Resource Economics, 2014, Volume 58, Number 4, Page 649

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