Peer Effects in Public Support for Pigouvian Taxation

72 Pages Posted: 19 Dec 2018

See all articles by Lingbo Huang

Lingbo Huang

Nanjing Audit University

Erte Xiao

Monash University

Date Written: November 2, 2018

Abstract

We examine how peer effects can impact public support for Pigouvian taxation in a market experiment with negative externalities. Our experimental data indicate that the support rate increases significantly when tax supporters are selected to communicate with voters. Nonetheless, left to their own devices, people are generally reluctant to communicate with and influence others. Among those who are willing, both tax supporters and objectors are equally likely to volunteer and are equally persuasive. As a result, the overall positive peer effect disappears. These findings offer an explanation for the continuing low public support for social-welfare enhancing tax policies.

Keywords: Market Experiment, Pigouvian Taxation, Negative Externality, Peer Effects,Vote

JEL Classification: D03, D62, D72, H23

Suggested Citation

Huang, Lingbo and Xiao, Erte, Peer Effects in Public Support for Pigouvian Taxation (November 2, 2018). Available at SSRN: https://ssrn.com/abstract=3294461 or http://dx.doi.org/10.2139/ssrn.3294461

Lingbo Huang

Nanjing Audit University ( email )

86 Yushan W Rd
Pukou, Jiangsu 210017
China

Erte Xiao (Contact Author)

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

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