how do market reforms affect china s responsiveness to environmental policy a large percentage of total investment in china is allocated by the central government at below market interest rates in pursuit of non economic objectives this has resulted in low rates of return and a high number of non performing loans threatening the future health of the chinese economy as a result reform of capital markets is a high priority of the chinese government at the same time the country is implementing various environmental policies to deal with serious pollution issues in this paper we ask how reforms of the capital market will affect the functioning of a carbon tax this allows us to assess how china s willingness to join global efforts to reduce carbon emissions is influenced by china s current efforts to reduce investment subsidies we compare the costs of a carbon tax in a reformed economy with the costs of a carbon tax in the current subsidized economy we find that in the subsidized economy the tax interaction effect dampens the effect of a carbon tax resulting in smaller reductions in emissions than what would result in a reformed economy importantly we also find that the effect on economic welfare from a carbon tax is lower in the subsidized economy in fact for lower levels of reductions the carbon tax is actually welfare improving these results have important implications for an economy undergoing economic transition the carbon tax rate required to achieve a certain level of emission reductions will be higher in an economy with capital subsidies however the welfare implications of the tax indicate that the current system with capital subsidies is highly distorting implying that there is a high efficiency cost for the non economic objectives the government is pursuing by maintaining this system of subsidies

tell me something i don t already know informedness and the impact of information programs we document how imperfect information generates heterogeneous effects in information treatments with personalized high frequency feedback and peer comparisons in our field experiment in retail electricity we find that high and low energy users symmetrically underestimate and overestimate their relative energy use pre treatment responses to personalized feedback however are asymmetric households that overestimate their relative use and low users both respond by consuming more these boomerang effects provide evidence that peer comparison information programs even those coupled with normative comparisons are not guaranteed to lead to increases in prosocial behavior jel codes c93 d12 d83 l94 q41

a bibliometric analysis of research on carbon tax from 1989 to 2014 abstract as one of the most cost effective means of emission reduction carbon tax has attracted considerable attention from economists and international organizations and has led to a large number of related research using the bibliometric method this paper characterizes the carbon tax literature from 1989 to 2014 based on the network database platform of web of science the results indicate that the usa occupies a leading position in the carbon tax field the vrije university amsterdam massachusetts institute of technology and stanford university were the most productive research institutes energy policy 143 has been the most productive journal followed by energy economics 44 and energy 38 in general the cooperation of authors institutes and nations are continuing to strengthen however the growth rate at the author level was significantly higher than the others in addition the current key research areas in the carbon tax field based on co keyword analysis are as follows climate change and relevant policy carbon emissions trading socio economic effects of carbon tax renewable energy endogenous technological change and carbon capture and storage the results of this paper will help researchers grasp the current research in the carbon tax field but also provide a supporting role for future work

cost push impact of taxing carbon in china a price transmission perspective abstract this paper aims to provide a comprehensive look at the potential price effects of a carbon tax at the sectoral level in chinese economy from a production perspective the sectors subjected to the levy are discussed based on sectoral linkage characteristics and then the tax induced repercussions of output prices are simulated using an extended i o price model the results based on the chinese economy for the year 2012 show that levying a carbon tax on sectors with above average co2 emission linkages and non significant production linkages will increase their output prices by an average of 1 93 while induce relatively slight price increases in the encouraged group 0 30 and the other group 0 34 the household is the least affected sector 0 28 in the economy this means that an appropriate tax design tends to shift intermediate inputs and expenditure toward less co2 intensive goods and services by its uneven cost push impacts on production sectors and the entire economy will ultimately get affected by establishing techniques for policy evaluation our analysis highlights the value of linkage analysis in the design of a carbon tax and brings more clarity to price transmission after the imposition of a carbon tax in the economy consequently the indirect effect of carbon tax on household can be better understood

are emissions permits regressive grandfathered emissions permits redistribute income to wealthy households by creating firm rents that ultimately accrue to shareholders consequently they can be highly regressive even if the poor do not have large budget shares for polluting goods using an analytical model this paper estimates the burden of emissions permits borne by different income groups under control of power plant emissions of carbon so2 and nox we also compare the burden borne by poor households under permits with that under emissions taxes performance standards technology mandates and input taxes and we show how the social costs of policies differ from efficiency costs when society has aversion to inequality

efficient environmental taxation under worker firm bargaining we study an economy with free firm entry and unemployment due to firm worker bargaining over each firm s surplus and where firms cause pollution that can be reduced by initial investments an uncompensated increase in the pollution tax reduces pollution but increases unemployment implying a tradeoff between the two when tax revenues are used to subsidize either firms hiring or investments employment may also increase creating a double dividend from the pollution tax a pollution tax increase used to subsidize current employment is always less effective than a hiring subsidy and is totally ineffective when subsidies equal pollution tax revenues for each individual firm we show that the hypothetical pollution tax implementing the first best solution exceeds the pigouvian tax the second best tax exceeds this first best tax when we have a double dividend and is below it when we do not

commuting transport tax reform and the labour market employer paid parking and the relative efficiency of revenue recycling instruments in this paper the welfare effects of a budget neutral increase in taxes on car commuters are studied in a model that takes into account the presence of employer paid parking at the workplace it is found that the presence of employer paid parking substantially increases the welfare effect of such a tax reform independent of the use of the revenues congestion taxes not only correct congestion externalities they also reduce the inefficiency caused by employer paid parking moreover different congestion effects of alternative recycling instruments and the presence of employer paid parking jointly imply that recycling the tax revenues via higher public transport subsidies may yield much more favourable welfare effects than previously believed it can easily outperform recycling the tax revenues via lower labour taxes finally cashing out parking costs to public transport users is found to generate substantial positive welfare effects numerical analysis confirms the theory

does the better than average effect show that people are overconfident two experiments we conduct two experimental tests of the claim that people are overconfident using new tests of overplacement that are based on a formal bayesian model our two experiments on easy quizzes find that people overplace themselves more precisely we find apparently overconfident data that cannot be accounted for by a rational population of expected utility maximizers who care only about money the finding represents new evidence of overconfidence that is robust to the bayesian critique offered by benoit and dubra jean pierre benoit and juan dubra 2011 apparent overconfidence econometrica 79 1591 1625 we discuss possible limitations of our results

regulation through output related profits tax prospects are discussed for regulating a multiproduct monopolistic enterprise through a tax on profit at a rate variable with output selection of weights when defining output could induce outcomes ranging from ramsey pricing to any desired pattern of cross subsidy the telecommunications industry is used to illustrate if quality depends upon output as in public transport socially optimal pricing would be induced the scheme has the advantage of limiting detailed intervention and preserving the profit motive however unrealistic assumptions are necessary and implementation would require a great deal of information this limits its practical value disenchantment with economic regulation creates a dilemma effective regulation can be difficult both in principle and in practice and it can carry unintended consequences on the other hand governments are unwilling to accept the full implications that leaving large multiproduct utilities to their own devices would have for pricing and output typical worries are excessive profit through the exploitation of monopoly fundamental changes in patterns of cross subsidy and neglect of the public service dimension interference with the setting of prices of individual products may be considered undesirable or impractical differential rates of commodity taxation could in principle solve many of the problems but they are not possible for institutional reasons even if government was inclined to use them however some of the enterprises in question are sufficiently large that it is feasible to levy differential rates of tax on total profits and profits taxes are generally accepted as having legitimate place in free enterprise this paper is an exploration of the extent to which profits tax might be made to simulate differential commodity taxes and so achieve policy objectives for an unregulated industry the special features of the tax which enable it to tackle this problem are that the rate of taxation is related to the level of physical output and in the case of a multi product enterprise output is defined as a weighted aggregate of individual outputs the output related profits tax was proposed by alan walters as a device for indirect regulation of the british telecommunications industry on its sale into private ownership the principles apply equally to urban transport

carbon tax or emissions trading an analysis of economic and political feasibility of policy mechanisms for greenhouse gas emissions reduction in the mexican power sector this study provides a comparative assessment of carbon pricing instruments for the mexican electricity sector contrasting a carbon tax with an emissions trading scheme ets the assessment is per

do women have more shame than men an experiment on self assessment and the shame of overestimating oneself we analyze how subjects self assessment depends on whether its accuracy is observable to others we find that women downgrade their self assessment given observability while men do not this holds true when the self assessment concerns a task with individual as well as competitive incentives women avoid the shame they may have if others observe that they overestimated themselves men however do not seem to be similarly shame averse this gender difference may be due to different societal expectations while we find that men are expected to be overconfident women are not the negative effect on women s self assessment is eliminated when performance is only imperfectly observable shame aversion may explain recent findings that women shy away from competition demanding jobs and wage negotiations as entering these situations demonstrates confidence in one s ability

price reaction and disagreement over public signal abstract we develop a theory of endogenous disagreement over the interpretation of public news based on the optimal expectation model proposed by brunnermeier and parker 2005 in our model each agent can form an optimal interpretation and agree to disagree with others we find that endogenous disagreement and trade may arise following public news events the model predicts that the market price overreacts to uninformative news and underreacts to informative news thus providing a unified account for the drift in price following significant news events and the excessive price volatility in response to noisy information

comment on m hoel emission taxes versus other environmental policies the choice of the appropriate instrument in environmental policy is not only a question of theoretical importance it is also of considerable political relevance while environmental taxes are sometimes used to control pollution quotas and direct controls dominate in practice if this observed bias is only due to the nature of policymaking and not supported by economic reasoning politicians are not well advised to use quotas and direct controls instead of environmental taxes hoel discusses popular arguments that are often used by politicians in favour of direct controls and concludes that the results are typically not clear cut in this comment i would like to focus on the employment effects of revenue raising and nonrevenue raising instruments politicians as well as special interest groups often claim that emission taxes increase the cost of production thereby harming employment clearly in the face of high rates of unemployment in many industrialized countries potentially negative employment effects of environmental regulation raise political resistance to green policy the ongoing debate has put

optimal departures from marginal cost pricing focuses on departures from marginal cost pricing optimal allocation or resources level of tax revenue that will be collected by the government theorems developed for resource allocation ebsco

overconfidence and social signalling evidence from both psychology and economics indicates that individuals give statements that appear to overestimate their ability compared to that of others we test three theories that predict such relative overconfidence the first theory argues that overconfidence can be generated by bayesian updating from a common prior and truthful statements if individuals do not know their true type the second theory suggests that self image concerns asymmetrically affect the choice to receive new information about one s abilities and this asymmetry can produce overconfidence the third theory is that overconfidence is induced by the desire to send positive signals to others about one s own skill this suggests either a bias in judgement strategic lying or both we formulate this theory precisely using a large data set of relative ability judgements about two cognitive tests we reject the restrictions imposed by the bayesian model and also reject a key prediction of the self image models that individuals with optimistic beliefs will be less likely to search for further information about their skill because this information might shatter their self image we provide evidence that personality traits strongly affect relative ability judgements in a pattern that is consistent with the third theory of social signalling our results together suggest that overconfidence in statements is more likely to be induced by social concerns than by either of the other two factors copyright 2013 oxford university press

how robust is the uniform emissions pricing rule to social equity concerns abstract this paper examines pollution tax differentiation across industries in light of social equity concerns using theoretical and numerical general equilibrium analyses in an optimal tax framework we characterize the drivers for non uniform optimal taxes stemming from the interaction of household heterogeneity with social preferences quantitatively assessing the case of price based co2 emissions control in the u s economy we find that uniform emissions pricing is approximately optimal when social concerns are defined over inequity induced by the environmental tax the deviation from uniform emissions pricing however becomes non negligible when pollution tax rebates deviate much from optimal transfer schemes or when social concerns are defined over both policy induced impacts and inequity unrelated to environmental policy our results are robust to a number of model extensions including the stringency of the environmental target downstream vs upstream taxation pre existing distortionary taxes and parametric uncertainty in firms and households equilibrium tax responses

information for regulating the case of taxis the authors consider the problems of inferring relevant evidence in regulation studies the model used depends on the assumptions of service at a given point a single fare uniform trip length and an infinitely elastic supply service elasticities of greater than unity can be ruled out under free entry conditions engaged ratios yield little information but it can be helpful if a price elasticity of greater than unity can be established deductions on the range of other variables can then be made it is found that profits cannot be used alone to indicate a desirable direction for a change in cab numbers regulators cannot alter prices and cab numbers to satisfy experimental design requirements cruising taxi trades operate in such a way so as to make necessary explicit valuation of the welfare of potential customers excluded from the valuations welfare may be improved by bringing into the market those with high valuations of time saved but who are deterred by low service levels free entry arguments should be used in decisions on the choice between regulation and competition author trrl

overconfidence as a social bias experimental evidence abstract the overconfidence bias is discussed extensively in economic studies yet fails to hold experimentally once monetary incentives and feedback are implemented we consider overconfidence as a social bias for a simple real effort task we show that individually economic conditions effectively prevent overconfidence by contrast the introduction of a very basic purely observational social setting fosters overconfident self assessments additionally observing others actions effectively eliminates underconfidence compared to the individual setting

poverty and distributional effects of a carbon tax in mexico abstract mexico recently declared ambitious goals in reducing domestic co2 emissions and introduced a carbon tax in 2014 although negative effects on household welfare and related poverty measures are widely discussed as possible consequences empirical evidence is missing we try to fill this gap by simulating an input output model coupled with household survey data to examine the welfare effects of different carbon tax rates over the income distribution the currently effective tax rate is small and has negligible effects on household welfare higher simulated tax rates maintaining the current tax base show a slight progressivity but welfare losses remain moderate welfare losses regressivity and poverty rise more with widening the tax base towards natural gas and the other greenhouse gases methane ch4 and nitrous oxide n2o mainly through food price increases for a complete analysis of the policy we simulate a redistribution of calculated tax revenues and find that the resulting effects become highly progressive also for high rates wider tax bases and even in the absence of perfect targeting of social welfare programs

dosis facit effectum why the size of the carbon tax matters evidence from the swedish residential sector abstract after 25 years of gradually increasing its carbon tax sweden now imposes the world s highest tax on carbon dioxide emissions this paper examines the effect of the swedish carbon tax on residential carbon emissions by using european panel data we employ synthetic control methods scms and perform difference in difference did regressions to evaluate the causal impact of carbon taxation on carbon emissions in the residential sector we provide evidence that early 2000s carbon tax augmentation had a causal effect on residential carbon emissions we find that the reduction of residential carbon emissions stemming from the carbon tax augmentation ranges from 200 kg when compared with other countries with a carbon tax of more than 20 euro to 800 kg when compared with countries without a carbon tax of co2 per capita per year hence the evidence suggests that carbon taxation is an effective tool for reducing residential co2 emissions and in turn mitigating climate change

household welfare and co2 emission impacts of energy and carbon taxes in mexico abstract we analyse the effects of environmental taxes on welfare and carbon emissions at the household level for the case of mexico the integrated welfare environmental analysis which is based on a censored energy consumer demand system extends previous work in two ways first the estimation of a full matrix of substitution elasticities allows us to test the necessity of incorporating second order effects into the welfare analysis second the substitution elasticities derived from the demand system are used to estimate the shortrun co2 emission reduction potential we find that first order approximations of welfare effects provide reasonable estimates particularly for carbon taxes analog to evidence in other low and middle income countries the taxation of all energy items is found to be regressive with the exception of motor fuels the analysis of the emission implications of different tax scenarios indicates that short run emission reductions at the household level can be substantial though the effects depend on how revenue is recycled this effectiveness combined with moderate and manageable adverse distributional impacts renders the carbon tax a preferred mitigation instrument considering the large effect of food price increases on poverty and the limited additional emission saving potential the inclusion of ch4 and n2o in a carbon tax regime is not advisable

gasoline demand revisited an international meta analysis of elasticities meta analysis is used to determine if there are factors that systematically affect price and income elasticity estimates in studies of gasoline demand four econometric models are estimated using long run and short run price and income elasticity estimates from previous studies as the dependent variables explanatory variables include functional form lag structure time span national setting estimation technique and other features of the model structure elasticity estimates are found to be sensitive to the inclusion or exclusion of some measure of vehicle ownership static models appear to overestimate short run elasticities underestimate long run price elasticities but pick up the full long run income responsiveness there is variation in the elasticity of demand across countries especially in the short run and gasoline demand appears to be getting more price elastic and less income elastic over time

the distributional effects of emissions taxation in brazil and their implications for climate policy abstract the emission of greenhouse gases ghg generated by human activity is a major cause of global warming and climate change there is considerable debate about the choice of the best mechanism to reduce emissions under a climate policy the aim of this paper is to measure the impact of a policy of taxing ghg emissions on the brazilian economy as a whole and on different household groups based on income levels in 2009 the following databases were used supply and use tables household budget survey national household sample survey and emissions data from the brazilian ministry of science and technology and innovation a price system from a national input output model that incorporates the intensity of ghg emissions is used as well as a consumption vector broken down into ten representative households with different income levels the main results indicate that this taxation system was slightly regressive and had a small negative impact on output there were however significant emissions reductions

optimal gasoline tax in developing oil producing countries the case of mexico this paper uses the methodology of parry and small 2005 to estimate the optimal gasoline tax for a less developed oil producing country the relevance of the estimation relies on the differences between less developed countries ldcs and industrial countries we argue that lawless roads general subsidies on gasoline poor mass transportation systems older vehicle fleets and unregulated city growth make the tax rates in ldcs differ substantially from the rates in the developed world we find that the optimal gasoline tax is 1 90 per gallon at 2011 prices and show that the estimate differences are in line with the factors hypothesized in contrast to the existing literature on industrial countries we show that the relative gasoline tax incidence may be progressive in mexico and more generally in ldcs

coal taxation reform in china and its distributional effects on residential consumers abstract there is an ongoing reform in coal taxation in china from a quantity based to a price based approach while the coal tax could play an important role in resource conservation and air pollution reduction its distributional effect is not well studied this paper investigates the distributional effect of china s coal taxes on households before and after the reform we find that about 30 percent of rural households and six percent of urban households are directly affected by the coal taxes and that the directly affected households tend to be poor we also find that provinces are affected differently by the coal taxes the provinces that are more affected tend to have lower household income by the suits index we find that both the quantity based and price based coal taxes are regressive for residential consumers in china and that the coal taxation reform had little effect on the regressivity of the coal tax by simulation we find that the regressivity of the coal tax could be reduced if the tax rate were set to be positively correlated with provincial household income

judgemental overconfidence self monitoring and trading performance in an experimental financial market we measure the degree of overconfidence in judgment in the form of miscalibration i e the tendency to overestimate the precision of one s information and self monitoring a form of attentiveness to social cues of 245 participants and also observe their behaviour in an experimental financial market under asymmetric information miscalibrated traders underestimating the conditional uncertainty about the asset value are expected to be especially vulnerable to the winner s curse high self monitors are expected to behave strategically and achieve superior results our empirical results show that miscalibration reduces and self monitoring enhances trading performance the effect of the psychological variables is strong for men but non existent for women

tax reform results with different demand systems abstract we calculate the marginal welfare costs for a twelve commodity classification of the belgian indirect tax system price elasticities are estimated with rotterdam aids cbs and the linear expenditure system the ranking of the marginal welfare costs is similar when we use unrestricted estimates of the first three systems after the symmetry condition of the slutsky matrix is imposed the differences become more important however they diminish with increasing inequality aversion

estimates from a consumer demand system implications for the incidence of environmental taxes abstract most studies suggest that environmental taxes are regressive making them less attractive policy options we consider the distributional effects of a gasoline tax increase using four incidence measures and under three scenarios for gas tax revenue use to incorporate behavioral responses we use consumer expenditure survey data to estimate a consumer demand system that includes gasoline other goods and leisure our estimates confirm that when revenues are not recycled a gasoline tax is regressive use of incidence measures that ignore demand responses however will substantially overstate this regressivity in contrast the differences between the equivalent variation and easier to implement consumer surplus measures are relatively small in addition our results suggest that using the additional gas tax revenue to fund labor tax cuts makes the policy substantially less regressive while using the revenue to fund lump sum transfers actually makes it progressive

distributional impacts of investment subsidies for residential energy technologies abstract this study analyses the distributional impacts of investment subsidies paid to households that install residential energy technologies based on renewable energy sources the subsidies covering a significant part of the total investment play a considerable role in households energy decisions depending on their design support measures may provide the most benefits to certain groups of society and thus may cause increasing inequality the potential distributional impacts of the investment subsidies are determined by the combination of technologies targeted and their costs household income support intensity subsidy design restrictions and the availability of additional measures this study examines the support system for residential renewable energy technologies in the lithuanian case by employing a microsimulation model this analysis of existing measures provides more general results and highlights the policy features that cause distributional impacts therefore the results are applicable in other countries as well the analysis shows that although the support is efficient from an energy point of view it provides the most benefits to households with higher income and thus increases inequality moreover the subsidies fail to reduce energy poverty due to the poorest households low capacity to invest to obtain a flatter distribution of benefits the design of support measures should consider the current situation of lower income households and affordability issues

who pays for industrial pollution abatement the distributional impact of industrial pollution abatement is measured for the years 1973 and 1977 the findings indicate that in 1977 1 09 of income or 0 510 of personal consumption expenditures of the lowest income class paid indirectly for abatement costs implicit in purchased goods for the highest income class the corresponding figures were 0 218 and 0 423 respectively in addition abatement costs per dollar of output are presented for representative industries

pollution taxes and revenue recycling abstract discussions of environmental policy and the tax system have emphasized the value of pollution tax revenues which can be used to reduce other tax distortions in the economy however by raising private marginal production costs environmental taxes also tend to reduce gdp and exacerbate the welfare costs of conventional taxes for environmental taxes in consumption goods industries the net welfare change from these two effects is negative unless this good is a relatively weak substitute for leisure an estimate for the optimal pollution tax with full revenue recycling is 63 to 78 of marginal environmental damages

running to keep in the same place consumer choice as a game of status if individuals care about their status defined as their rank in the distribution of consumption of one positional good then the consumer s problem is strategic as her utility depends on the consumption choices of others in the symmetric nash equilibrium each individual spends an inefficiently high amount on the status good using techniques from auction theory we analyze the effects of exogenous changes in the distribution of income in a richer society almost all individuals spend more on conspicuous consumption and individual utility is lower at each income level in a more equal society the poor are worse off

carbon tax incidence on household demand effects on welfare income inequality and poverty incidence in thailand abstract studying the impact of a carbon tax on household demand can be relevant in terms of securing public acceptance of a carbon tax and clarifying the implications for policy design this paper aims to fill a gap in the academic literature by simulating carbon tax scenarios and estimating distributional effects of the tax on household welfare income inequality and poverty rates based on household consumption in thailand the study employs a microsimulation model incorporating the economy wide effects of the tax on prices and consumers behavioral responses to changes in prices the results indicate that a carbon tax is progressive in thailand under revenue recycling scenarios by expanding social transfer programs when carbon tax revenues are recycled through pensions for elderly people the carbon tax could reduce the poverty rate and improve the welfare of households in the lowest quintile the results imply that the distributional impacts of environmental taxes could result in favorable outcomes for income inequality and poverty reduction in developing countries

effects of the internalization of the social cost of global and local air pollutants in chile abstract in 2017 environmental taxes on global pollutants co2 and local air pollutants so2 nox and pm began to be collected to reduce emissions in chile however large emitting sources only are subject to environmental taxes and the tax rates are much lower than the social cost of these pollutants which does not allow to fully internalize the generated damages for the above this study uses the environmental extension of the leontief price model and microsimulations to estimate the economic environmental distributive and poverty short term effects associated with the application of pigouvian taxes on all emissions generated by productive activities the results show that currently there are too many resources allocated to activities that generate strong negative externalities mainly in the electricity and transport sectors specifically the emissions are reduced almost 10 times more than in the current tax scenario if environmental taxes equal to social costs are applied but relevant negative indirect effects are generated that make the practical application of a tax of these characteristics unrealistic for example there is a fall between 1 2 and 2 9 in employment slightly worsening the income distribution and increases the poverty rate between 0 9 and 2 3 percentage points

environmental levies and distortionary taxation pigou taxation and pollution i note an important distinction between the optimal price of environmental quality in a second best world and the optimal level of environmental quality using an analytical general equilibrium model i show that for reasonable parameter values an increase in tax distortions arising from an increase in required tax revenues leads to a fall in the optimal pigouvian tax rate even while environmental quality improves in general knowledge of the direction of changes in optimal environmental tax rates due to changes in the economy is not sufficient for understanding the impact on environmental quality 2003 elsevier science b v all rights reserved

optimal control of externalities in the presence of income taxation optimal control of externalities a substantial literature examines second best environmental policy focusing particularly on how the pigouvian directive that marginal taxes should equal marginal external harms needs to be modified in light of the preexisting distortion due to labor income taxation additional literature is motivated by the possibility that distributive concerns should amend the internalization prescription it is demonstrated however that simple first best rules unmodified for labor supply distortion or distribution are correct in a natural basic formulation of the problem specifically setting all commodity taxes equal to marginal harms and subsidies equal to marginal benefits can generate a pareto improvement likewise a marginal reform in the direction of the first best can yield a pareto improvement for other reforms a simple efficiency test characterizing when a pareto improvement is possible is offered qualifications and explanations for the substantial departure from results in previous work are also elaborated

optimal dynamic carbon taxes in a climate economy model with distortionary fiscal policy how should carbon be taxed as a part of fiscal policy the literature on optimal carbon pricing often abstracts from other taxes however when governments raise revenues with distortionary taxes carbon levies have fiscal impacts while they raise revenues directly they may shrink the bases of other taxes e g by decreasing employment this article theoretically characterizes and then quantifies optimal carbon taxes in a dynamic general equilibrium climate economy model with distortionary fiscal policy first this article establishes a novel theoretical relationship between the optimal taxation of carbon and of capital income this link arises because carbon emissions destroy natural capital they accumulate in the atmosphere and decrease future output consequently this article shows how the standard logic against capital income taxes extends to distortions on environmental capital investments second this article characterizes optimal climate policy in sub optimal fiscal settings where income taxes are constrained to remain at their observed levels third this article presents a detailed calibration that builds on the seminal dice approach but adds features essential for a setting with distortionary taxes such as a differentiation between climate change production impacts e g on agriculture and direct utility impacts e g on biodiversity existence value the central quantitative finding is that optimal carbon tax schedules are 8 24 lower when there are distortionary taxes compared to the setting with lump sum taxes considered in the literature

distributional effects of carbon taxes the case of mexico abstract in this study i develop an analytical general equilibrium model to assess the distributional effects across income groups of a carbon tax assuming that the revenue from the carbon tax is recycled in two different ways as a manufacturing tax cut and a food subsidy i use this analytical model to provide intuition about the main distributional components the model is calibrated with data from mexico to obtain unambiguous price and quantity changes i find that the distribution of the costs is driven by the way the revenue is recycled in particular the costs are distributed regressively when the revenue is recycled as a manufacturing tax cut and progressively when it is recycled as a food subsidy providing a food subsidy also generates higher welfare and lower carbon emissions than the manufacturing tax cut to compare and test the robustness of the numerical findings for mexico i calibrate the model with data for a developed country specifically the u s a despite differences in the magnitude of the changes in some variables the general findings mentioned above also hold for u s a data these results suggest that as found for the u s a in recent studies carbon taxes are not necessarily regressive rather the way revenue is recycled is a major determinant of how the carbon tax costs are distributed

energy taxes in the netherlands what are the dividends in this paper the environmental and economic effects of the introduction of a unilateral energy tax in the netherlands are analysed using an applied general equilibrium age model the effects of a small user energy tax and a general energy tax are compared while taking into account different tax recycling mechanisms the model contains a great level of detail with respect to emissions and environmental indicators greenhouse effect acidification eutrophication and waste which is helpful for assessing environmental quality the results show that the introduction of a small environmental tax reform not only improves the environment but also raises non environmental welfare which is due to an improvement of the efficiency of the tax structure

unrealistic expectations and misguided learning we explore the learning process and behavior of an individual with unrealistically high expectations overconfidence when outcomes also depend on an external fundamental that affects the optimal action moving beyond existing results in the literature we show that the agent s beliefs regarding the fundamental converge under weak conditions furthermore we identify a broad class of situations in which learning about the fundamental is self defeating it leads the individual systematically away from the correct belief and toward lower performance due to his overconfidence the agent even if initially correct becomes too pessimistic about the fundamental as he adjusts his behavior in response he lowers outcomes and hence becomes even more pessimistic about the fundamental perpetuating the misdirected learning the greater is the loss from choosing a suboptimal action the further the agent s action ends up from optimal we partially characterize environments in which self defeating learning occurs and show that the decisionmaker learns to take the optimal action if and in a sense only if a specific non identifiability condition is satisfied in contrast to an overconfident agent an underconfident agent s misdirected learning is self limiting and therefore not very harmful we argue that the decision situations in question are common in economic settings including delegation organizational effort and public policy choices

distributional effects of a carbon tax on chinese households a case of shanghai abstract as an effective policy instrument to reduce co 2 emissions the effects of a carbon tax on distribution have been the critical factor in determining whether a carbon tax will be acceptable in china taking shanghai as an example which is the economic center and front runner of china this paper estimates the distributional effect of a carbon tax on households in various income groups by using the input output model and the suits index the results indicate that the comprehensive distributional effect of the carbon tax is regressive the expenditure of the low income group caused by the carbon tax accounts for 0 853 of the total expenditure while that of the high income group 0 712 the direct distributional effect presents a weak progressivity while the indirect one is significantly regressive and the latter is much larger than the former moreover the suits index of the carbon tax is 0 078 implying that the carbon tax burden on the low income group is the highest and thus that a carbon tax can intensify income inequality therefore when introducing a carbon tax some rational associated redistribution or compensation measures such as purposive transfer payments should be implemented to restrict or even eliminate the regressivity of the carbon tax

distributional incidence of green electricity price subsidies in china abstract distributional incidences are fundamental to environmental and energy policies a condition that has led to controversies on the equity of environmental and energy policy using data from china s urban household income and expenditure survey data from 2007 this study quantified the distributional effects of the green electricity price subsidy policy among chinese urban household and compared its effects by using lifetime income and annual income to classify households respectively the results show that total electricity subsidies are mainly driven by indirect electricity subsidies by using lifetime income to classify households subsidies to households in the poorest two groups accounted for less than 10 2 of the total subsidies whereas money distributed to households in the top two deciles reached 35 4 the comparison using annual income to group households also demonstrated the similar impact of the green electricity price subsidy policy china s future market reforms should allow electricity prices to reflect pollution abatement costs additionally a multi step block electricity price schedule can reduce the regressivity of the policy

self confidence and personal motivation the maintenance and enhancement of self esteem has always been identified as a fundamental human impulse philosophers writers educators and of course psychologists have all emphasized the crucial role played by self image in motivation affect and social interactions the aim of this chapter is to bring these concerns into the realm of economic analysis and show that this has important implications for how agents process information and make decisions conversely the tools of economic modelling can help shed light on a number of apparently irrational behaviours documented by psychologists

how do beliefs about skill affect risky decisions abstract beliefs about relative skill matter for risky decisions such as market entry career choices and financial investments yet in most laboratory experiments risk is exogenously given and beliefs about relative skill play no role we use a laboratory experiment without strategy confounds to isolate the impact of beliefs about relative skill on risky choices we find that low high skill individuals are more less willing to take risks on gambles where the probabilities depend on relative skill than on gambles with exogenously given probabilities this happens because low high skill individuals overestimate underestimate their relative skill consequently the wrong people may engage in risky activities where performance is based on relative skill while the right people may be crowded out

the role of noncognitive skills in explaining cognitive test scores this paper examines whether noncognitive skills measured both by personality traits and economic preference parameters influence cognitive tests performance the basic idea is that noncognitive skills might affect the effort people put into a test to obtain good results we experimentally varied the rewards for questions in a cognitive test to measure to what extent people are sensitive to financial incentives to distinguish increased mental effort from extra time investments we also varied the questions time constraints subjects with favorable personality traits such as high performance motivation and an internal locus of control perform relatively well in the absence of rewards consistent with a model in which trying as hard as you can is the best strategy in contrast favorable economic preference parameters low discount rate low risk aversion are associated with increases in time investments when incentives are introduced consistent with a rational economic model in which people only invest when there are monetary returns the main conclusion is that individual behavior at cognitive tests depends on noncognitive skills