Technology Category
Game Theory and Economic Paradigms: Social Choice / VotingMultiagent Systems: Mechanism DesignKnowledge Representation and Reasoning: Preferences
Green Transition with Dynamic Social Preferences
🤖 AI Summary
This paper investigates the design of carbon taxation policies in the context of green transitions, focusing on consumers’ green preferences—which exhibit both intrinsic stability at the individual level and dynamic social externalities (i.e., positive feedback from evolving social norms). We develop a dynamic general equilibrium model that endogenizes the evolution of social preferences, thereby capturing the complementary interaction between policy instruments and social norm formation. Theoretically, we demonstrate that incorporating social preference feedback significantly enhances policy effectiveness: it permits a lower initial tax rate, phased tax reductions, and even eventual policy exit—substantially lowering the welfare cost of transition. Our key contribution is to formally identify and quantify the amplifying effect of social norm externalities on carbon taxation, providing rigorous theoretical foundations and optimization guidelines for “light-start, smooth-transition, soft-exit” green fiscal policies.
Technology Category
Application Category
📝 Abstract
We examine a green transition policy involving a tax on brown goods in an economy where preferences for green consumption consist of a constant intrinsic individual component and an evolving social component. We analyse equilibrium dynamics when social preferences exert a positive externality in green consumption, creating complementarity between policy and preferences. The results show that accounting for this externality allows for a lower tax rate compared to policy ignoring the social norm effects. Furthermore, stability conditions permit gradual tax reductions or even removal along the transition path, minimising welfare losses. Thus, incorporating policy-preference interactions improves green transition policy design.
Problem
Research questions and friction points this paper is trying to address.
Analyzing green transition policy with dynamic social preferences.
Studying tax impact on brown goods considering social norms.
Optimizing tax rates by accounting for preference externality effects.
Innovation
Methods, ideas, or system contributions that make the work stand out.
Tax on brown goods with social preference externality
Lower tax rate by accounting for social norms
Gradual tax reduction minimizes welfare losses
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