Question

Suppose instead that an emissions tax is placed directly on consumers. Under what conditions will producers also bear some of the burden of this tax

Answer 1

Answer:

Emissions Tax on consumers:

Assuming that the demand for the product under which the emissions tax is placed directly on consumers is elastic, then producers will also bear some of the burden of this tax in lost sales.  Warehouse costs will skyrocket as consumers literally boycott the products and producers are forced to stop further production.  These have far-reaching implications.

Explanation:

By placing the burden on consumers directly, consumers will spend more for the same quantity of goods, if there are no substitutes.  Such tax is usually levied to discourage consumption of certain goods.