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Promoting demand for organic food under preference and income heterogeneity

Eerola, Essi and Huhtala, Anni (2005) Promoting demand for organic food under preference and income heterogeneity. Paper at: The future of rural Europe in the global agri-food system : the XIth international congress of European Association of Agricultural Economists EAAE, Copenhagen, Denmark, August 24-27, 2005.

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Summary

We examine the design of policies for promoting the consumption of green products under preference and income heterogeneity using organic products as an example. Two instruments are considered: a price subsidy for the organic products and a tax on the conventional products. Under income disparity, consumers with high income always prefer a socially optimal subsidy to a socially optimal tax, while low-income consumers prefer a tax on conventional products. When environmental policy is determined by the median voter, the policies implemented tend to be stricter than socially optimal policies if income differences are large.


EPrint Type:Conference paper, poster, etc.
Type of presentation:Paper
Keywords:taxation, preference heterogeneity, income disparity
Subjects: Food systems > Policy environments and social economy
Research affiliation: Finland > Univ. Helsinki
Finland > MTT Agrifood Research
Related Links:http://agecon.lib.umn.edu
Deposited By: Koistinen, Riitta
ID Code:8611
Deposited On:31 May 2006
Last Modified:12 Apr 2010 07:33
Document Language:English
Status:Published
Refereed:Not peer-reviewed

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