Peer Effects in Public Support for Pigouvian Taxation

45 Pages Posted: 19 Dec 2018 Last revised: 29 May 2020

See all articles by Lingbo Huang

Lingbo Huang

Nanjing Audit University

Erte Xiao

Monash University

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

Huang, Lingbo and Xiao, Erte, Peer Effects in Public Support for Pigouvian Taxation (May 29, 2020). Available at SSRN: or

Lingbo Huang

Nanjing Audit University ( email )

86 Yushan W Rd
Pukou, Jiangsu 210017

Erte Xiao (Contact Author)

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800

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