Sangeeta Bansal

Tax/subsidy policies in the presence of environmentally aware consumers ☆

Abstract We study policy measures to improve environmental quality in the presence of environmentally aware consumers. We consider two sets of policy instruments—uniform policies for the firms and policies that discriminate between the firms based on their environmental quality. For the latter set, either the better performer is rewarded with a subsidy or, the worse performer is punished with a tax. We find that while a uniform subsidy policy improves average environmental quality, a uniform tax policy worsens it. Further while a discriminatory subsidy policy reduces total pollution and enhances aggregate welfare, a discriminatory tax policy may increase total pollution and may reduce aggregate welfare.

Factors Explaining Corporate Social Responsibility Expenditure in India

The passage of the CSR clause in the Companies Act, 2013 has been a landmark decision. This article tries to understand the reasons that determine the CSR expenditure by firms before the implementation of the law through a cross section study. The study finds that industry types and environmental factors determine the CSR expenditure by firms and also explains the endogenous relationship between CSR expenditure and profitability which had remained unexplored for Indian firms.

Environmental quality: impact of economic growth

Using a vertically differentiated product model, the paper aims to investigate the effects of economic growth on market provision of product quality. The quality attribute considered is the environmental friendliness of products. Economic growth is modeled as a shift in income distribution. It shows that the effect of economic growth depends on the form it takes. A growth in income that is uniform across consumers improves the cleanup levels adopted by both firms. However, a growth in income that is accompanied by changes in income inequality may result in the lowering of one of the two qualities. More specifically, if the growth in income is accompanied by increased disparities in income distribution, the quality of the (environmentally) inferior variant is reduced. This has serious implications for the poor consumers if the product has safety or health hazards. The paper suggests a regulatory measure to prevent such deterioration in the quality of the inferior variant.

Distributional Effects of Adopting Carbon Tax in India

In international forums discussing ways to address climate change, carbon tax has been proposed as a policy instrument to mitigate greenhouse gas emissions. The cost of implementation of the policy, however, may be distributed differently across different sections of the society. Existing studies from developed and developing countries found mixed results of distributional effects of a carbon tax, and the effect of carbon tax on a developing country like India is still unclear. This study examines the distributional effects of adopting carbon tax in India. It uses the 2009–10 national sample survey data covering over 100855 households and analyses the rural and urban areas separately. A budget share approach with a summary measure of Suit Index has been applied to examine the direct effect of carbon tax on Indian households. We find that carbon tax in India is mildly progressive and this progressivity is higher in rural sector as compared to urban sector. The progressivity also varies between different fuels. In comparison to electricity and LPG, carbon tax is regressive for kerosene in India.

The Informational and signaling impacts of labels: Experimental evidence from India on GM foods

Much of the debate between the European and U.S. positions about labeling of genetically modified foods has been whether consumers perceive labels as a source of information or a signal to change behavior. In this paper, we provide an experimental framework for examining these roles of information and signaling. While previous studies have focused on the impact of labels on consumer behavior, our interest is also what happens prior to the expression of aversion to GM-labeled foods. In particular, the experiment design allows the researcher to estimate a lower bound of the informational impact of labels on GM food aversion. The other novel feature of this paper is that unlike earlier studies, it uses subjects from a developing country.