Energy Efficiency Standards Are More Regressive Than Energy Taxes: Theory and Evidence
Chapter in NBER book Energy Policy Tradeoffs between Economic Efficiency and Distributional Equity (2019), Tatyana Deryugina, Don Fullerton, and Billy Pizer, organizers
Economists endorse taxes as a cost-effective means of reducing pollution. But policy makers raise concerns about their regressivity, or disproportional burden on poorer families, preferring instead to regulate energy efficiency. I first show that in theory, energy efficiency standards are more regressive than energy taxes, not less. I then provide an example using data on automobiles 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.This chapter is not currently available on-line.
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Document Object Identifier (DOI): 10.1086/701186This chapter first appeared as NBER working paper w22956, Energy Efficiency Standards Are More Regressive Than Energy Taxes: Theory and Evidence, Arik Levinson