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A Peer-reviewed scientific articles/A1 Journal article (refereed), original research
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Sin licenses revisited, Journal of Public Economics (2016). Haavio, Markus; Kotakorpi, Kaisa

Category A Peer-reviewed scientific articles
Sub-category A1 Journal article (refereed), original research
auki Internal authors
All authors as text Haavio, Markus; Kotakorpi, Kaisa 
Number of authors
Status Published
Year of publication 2016 
Date 21.09.2016 
Name of article Sin licenses revisited 
Name of journal Journal of Public Economics
Volume of issue 144 
Number of issue December 
Pages 40–51 
Abstract We analyze personalized regulation in the form of sin licenses to correct the distortion in the consumption of a harmful good when consumers suffer from varying degrees of self-control problems. We take into account preference uncertainty, which generates a trade-off between flexibility and commitment provided by sin licenses. We also account for the possibility that consumers may trade the sin good in a secondary market, which partially erodes the commitment power of sin licenses. We show that if sophisticated consumers are allowed to choose any general, individualized pricing scheme for sin goods, they will choose a system of sin licenses. Nevertheless, sin licenses do not implement the social optimum in our general setting. We derive a simple criterion for assessing whether switching to a system of sin licenses improves welfare over linear sin taxes.
Free text descriptor in English Demand uncertainty; Non-linear pricing; Secondary markets; Self-control problems; Sin licenses 
JEL-codes H21;H30;I18 
ISSN / e-ISSN 0047-2727 
auki Internet addresses

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