Water Taxes and Consumer Behavior in France

18 Pages Posted: 14 Dec 2017

See all articles by Simon Porcher

Simon Porcher

IAE Paris - Sorbonne Business School

Date Written: February 1, 2017

Abstract

Water taxes are employed to correct externalities associated with water pollution or resource scarcity and to raise government revenue. In this paper, using a dataset on more than 4,000 French municipalities, we directly examine how water taxes affect consumer behavior as distinct from tax-exclusive water prices. Our analysis shows that a 10-cent tax increase reduces water consumption by 0.26 percent, similarly to a 10-cent increase in the tax-exclusive water price. The responsiveness of consumers to tax and tax-exclusive price is important because it gives information about consumers’ sensitivity to policy interventions versus market prices.

Keywords: Externalities, Water Utilities

JEL Classification: H23, L95

Suggested Citation

Porcher, Simon, Water Taxes and Consumer Behavior in France (February 1, 2017). Available at SSRN: https://ssrn.com/abstract=3086778 or http://dx.doi.org/10.2139/ssrn.3086778

Simon Porcher (Contact Author)

IAE Paris - Sorbonne Business School ( email )

IAE - Université Paris I Panthéon-Sorbonne
8 bis rue croix de Jarry
Paris, 75013
France

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