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October 13, 2025Open Access

The Unequal Costs of Pollution: Carbon Tax, Inequality, and Redistribution

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Authors

CCCristiano CantoreGBGiovanni Di BartolomeoCorvinus University of BudapestFGFrancesco Saverio Gaudio

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Implication

Analysis reveals how income inequality shapes the carbon tax and redistribution strategies, suggesting significant implications for efficiency.

Key Points

  • The optimal carbon tax is influenced by income inequality and household heterogeneity, especially affecting its cyclical behavior.
  • When prioritizing redistribution to poorer households, the optimal tax rate decreases and experiences greater fluctuations.
  • Two scenarios illustrate the impact of unrestricted versus constrained redistribution on the optimal carbon tax level.
  • This analysis highlights the distinct relationship between household dynamics and the social cost of carbon in tax policy frameworks.

Cite This Study

Cantore et al. (2025) studied this question.

synapsesocial.com/papers/68ecc715d1cc7436f7d18923https://doi.org/10.48550/arxiv.2503.00142
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Also Consider

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