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Voting for Environmental Policy under Income and Preference Heterogeneity

Essi Eerola and Anni Huhtala
American Journal of Agricultural Economics
Vol. 90, No. 1 (Feb., 2008), pp. 256-266
Stable URL: http://www.jstor.org/stable/30139504
Page Count: 11
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Voting for Environmental Policy under Income and Preference Heterogeneity
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Abstract

We examine the design of policies for promoting the consumption of green products under preference and income heterogeneity using organic food as an example. Two instruments are considered: a price subsidy for organic food products and a tax on conventional products. When the income differences and social benefits of organic farming are large, these factors dominate in shaping the policy preferences of the majority. In this case, the environmental policies preferred by the majority tend to be stricter than socially optimal policies. However, when income differences are small, policy preferences are more directly determined by tastes for organic products and the majority may prefer no intervention.

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