Do Mobile Payments Undermine the Effectiveness of Environmental Policy? Consumer Behavior from the Perspective of Pigouvian Tax Salience

Using individual-level offline retail consumption data from a coastal city in China for 2016–2020, this paper examines whether mobile payments undermine the effectiveness of the policy requiring consumers to pay for plastic shopping bags at retail establishments. The results show that mobile payments substantially reduce the tax salience of plastic bag charges as a Pigouvian tax, making consumers more likely to purchase plastic bags when paying by mobile payment than when paying in cash. Drawing on consumers' rounding behavior under cash payments, this paper analyzes and verifies the mechanism through which mobile payments affect Pigouvian tax salience.