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Public unacceptability of carbon pricing, perceived costs and effectiveness of policy

Published online by Cambridge University Press:  19 March 2025

Yang Liu Open the ORCID record for Yang Liu [Opens in a new window] ,
Jie Yang Open the ORCID record for Jie Yang [Opens in a new window]  and
Xinye Zheng
Yang Liu
Affiliation:
School of Applied Economics, Renmin University of China, Beijing, China
Jie Yang*
Affiliation:
School of Applied Economics, Renmin University of China, Beijing, China
Xinye Zheng
Affiliation:
School of Applied Economics, Renmin University of China, Beijing, China
*
Corresponding author: Jie Yang; Email: [email protected]
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Abstract

Public acceptability is crucial for the effectiveness of policy implementation. The carbon trading market is widely adopted by many countries and regions to achieve carbon neutrality and mitigate climate change. Our paper utilizes China's carbon trading market as a quasi-natural experiment, drawing on microdata from the China Residential Energy Consumption Survey to analyze the policy's impact on public acceptance of carbon pricing. We find that the carbon trading market significantly reduces the acceptability of carbon prices among households working in carbon-related industries in the pilot areas. This conclusion is still valid after a series of robustness checks. Regarding the mechanism of influence, the carbon trading market raises households' perceived costs, mainly reflected in the negative impact of rising product prices and increasing living costs. Finally, enhancing public perception of carbon, improving the distribution effect and decreasing the information asymmetry of the policy implementation can improve public acceptability of carbon prices.

Keywords

carbon price acceptancecarbon trading marketeffectivenessperceived costs

JEL classification

R21: Housing Demand Q56: Environment and Development • Environment and Trade • Sustainability • Environmental Accounts and Accounting • Environmental Equity • Population Growth D12: Consumer Economics: Empirical Analysis Q41: Demand and Supply • Prices
Type
Research Article
Information
Environment and Development Economics , First View , pp. 1 - 19
Copyright
Copyright © The Author(s), 2025. Published by Cambridge University Press

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