2013), Hedonic vs Environmental Quality: Which Policy Can Help in Lowering Pollution Emissions? Working paper 905

In this paper we compare two policy instruments that can be adopted to curb carbon emissions. The rst is a conventional pollution tax. The second is an environmental campaign aiming to inuence consumers to switch to a green good. We consider two di¤erent scenarios. When consumers are characterized by hedonic quality preferences, in this case the pollution tax is more e ¢ cient than the campaign. On the contrary, when consumers develop environmental quality preferences, there are cases in which the campaign is preferred. To sum up, while both policy instruments are e¤ective in reducing pollution emissions, their e ¢ ciency viewed from a welfare perspective crucially depends on consumersenvironmental awareness