A political-economic analysis of the Red State-Blue State dichotomy on climate change policy

Matthew Kahn at UCLA lists his research addressing why voters and politicians in low-energy cost / high-carbon emitting areas oppose GHG reduction policies. He shows how protecting the status quo is in their interests, including for lower-income suburban dwellers. Proponents of climate change policies should consider how to compensate the range of “losers” from adopting these policies. Using carbon tax revenues to offset other taxes or as income-based rebates is one type of solution. I’ve pointed out previously that ignoring the need to compensate those who have reduced welfare from a policy choice both improves economic efficiency and reduces political opposition.

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One thought on “A political-economic analysis of the Red State-Blue State dichotomy on climate change policy

  1. Pingback: Cap & trade and market design | Economics Outside the Cube

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