Who Bears the Economic Costs of Environmental Regulations?

35 Pages Posted: 25 Aug 2017

See all articles by Don Fullerton

Don Fullerton

University of Illinois at Urbana-Champaign - Department of Finance; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Erich Muehlegger

University of California, Davis - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: July 2017

Abstract

Public economics has a well-developed literature on tax incidence – the ultimate burdens from tax policy. This literature is used here to describe not only the distributional effects of environmental taxes or subsidies but also the likely incidence of non-tax regulations, energy efficiency standards, or other environmental mandates. Recent papers find that mandates can be more regressive than carbon taxes. We also describe how the distributional effects of such policies can be altered by various market conditions such as limited factor mobility, trade exposure, evasion, corruption, or imperfect competition. Finally, we review data on carbon-intensity of production and exports around the world in order to describe implications for effects of possible carbon taxation on countries with different levels of income per capita.

Keywords: distributional effects, carbon tax, environmental policy, incidence

JEL Classification: H220

Suggested Citation

Fullerton, Don and Muehlegger, Erich, Who Bears the Economic Costs of Environmental Regulations? (July 2017). CESifo Working Paper Series No. 6596. Available at SSRN: https://ssrn.com/abstract=3025289

Don Fullerton (Contact Author)

University of Illinois at Urbana-Champaign - Department of Finance ( email )

1206 South Sixth Street
Champaign, IL 61820
United States
(217) 244-3621 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Erich Muehlegger

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States

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