Arbeitspapier
The Effectiveness of Taxation and Feed-in Tariffs
We study (energy) markets with dirty incumbents and costly entry by clean producers. For intermediate entry costs, the market outcome exhibits inefficient production and inefficient entry. A policy mix of three popular regulatory instruments—taxation on polluters, feed-in tariffs for clean entrants, and taxation of consumption—cannot correct these two market failures. Feed-in tariffs and consumption taxes are ineffective instruments for implementing the first best. The second best requires feed-in tariffs or consumption taxes. For a given level of production, the instruments are ineffective in influencing the overall budget, but may be effective for other budgetary concepts.
- Language
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Englisch
- Bibliographic citation
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Series: CESifo Working Paper ; No. 4788
- Classification
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Wirtschaft
Firm Behavior: Theory
Allocative Efficiency; Cost-Benefit Analysis
Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- Subject
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taxation
feed-in tariffs
externalities
entry
pollution
- Event
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Geistige Schöpfung
- (who)
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Antoniou, Fabio
Strausz, Roland
- Event
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Veröffentlichung
- (who)
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Center for Economic Studies and ifo Institute (CESifo)
- (where)
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Munich
- (when)
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2014
- Handle
- Last update
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10.03.2025, 11:42 AM CET
Data provider
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Object type
- Arbeitspapier
Associated
- Antoniou, Fabio
- Strausz, Roland
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2014