Tuesday, December 20, 2016

Energy Efficiency Standards Are More Regressive Than Energy Taxes: Theory and Evidence

NBER Working Paper by Arik Levinson. Here is the abstract.
"Economists promote energy taxes as cost-effective. But policymakers raise concerns about their regressivity, or disproportional burden on poorer families, preferring to set energy efficiency standards instead. I first show that in theory, regulations targeting energy efficiency are more regressive than energy taxes, not less. I then provide an example in the context of automotive fuel consumption in the United States: taxing gas would be less regressive than regulating the fuel economy of cars if the two policies are compared on a revenue-equivalent basis." 

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