Peer Effects in Public Support for Pigouvian Taxation
45 Pages Posted: 19 Dec 2018 Last revised: 29 May 2020
Date Written: May 29, 2020
Despite their efficacy, governments often find Pigouvian taxes surprisingly controversial to implement. Evidence has suggested that this may be attributed to their complexity. We study whether communication among peers can promote public support for Pigouvian taxation in a market experiment with negative externalities. We find that efficient taxation is adopted more frequently when tax supporters can explain their position to other voters. These results point to the importance of giving voice and visibility to members of the general public who support efficient but complex tax policies.
Keywords: Market Experiment, Pigouvian Taxation, Negative Externality, Peer Effects,Vote
JEL Classification: D03, D62, D72, H23
Suggested Citation: Suggested Citation