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1.
We compare emissions taxes and quotas when a (strategic) regulator and (non-strategic) firms have asymmetric information about
abatement costs, and all agents use Markov perfect decision rules. Firms make investment decisions that affect their future
abatement costs. For general functional forms, firms’ investment policy is information-constrained efficient when the regulator
uses a quota, but not when the regulator uses an emissions tax. This advantage of quotas over emissions taxes has not previously
been recognized. For a special functional form (linear–quadratic) both policies are constrained efficient. Using numerical
methods, we find that a tax has some advantages in this case. 相似文献
2.
Arun S. Malik 《Journal of Regulatory Economics》2007,32(1):1-16
I develop a principal-agent model of environmental regulation in which the regulator can acquire two costly signals of the
firm’s abatement effort. Acquisition of the second signal is conditioned on the observed value of the first, emissions signal.
The optimal contract takes the form of an emissions standard when only the emissions signal is acquired, and a set of contingent
emissions standards when both signals are acquired; the standards are coupled with uniform, maximal penalties for noncompliance.
Acquisition of the second signal may be optimal when intermediate values of the first signal are observed but not when extreme
values are observed.
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3.
In contrast with what we perceive is the conventional wisdom about setting a second-best emissions tax to control a uniformly
mixed pollutant under uncertainty, we demonstrate that setting a uniform tax equal to expected marginal damage is not generally
efficient under incomplete information about firms’ abatement costs and damages from pollution. We show that efficient taxes
will deviate from expected marginal damage if marginal damage is increasing and there is uncertainty about the slopes of the
marginal abatement costs of regulated firms. Moreover, tax rates will vary across firms if a regulator can use observable
firm-level characteristics to gain some information about how the firms’ marginal abatement costs vary. 相似文献
4.
We examine the role that product differentiation can play in the design of environmental policy under full commitment and no commitment on the part of the environmental regulator. We consider a setting with two firms selling a differentiated product which generates pollution through emissions. Firms can reduce their emissions by undertaking abatement activities while an environmental regulator taxes emissions. The main results are: (1) When products are highly differentiated, the optimal time-consistent (no commitment) tax is always lower than the optimal pre-commitment tax. As the degree of product differentiation decreases, for relatively efficient abatement technology and high damages, the time-consistent emission tax exceeds the optimal pre-commitment one. (2) Abatement when product differentiation is extensive is higher under the time-consistent regime unless the abatement technology is extremely efficient. The same ranking applies to social welfare. However, as products become more and more similar, these results are (partially) reversed and pre-commitment could lead to both higher levels of abatement and welfare. 相似文献
5.
This paper re-examines environmental regulation, under the assumption that pollution abatement technologies and services are provided by an imperfectly competitive environment industry. It is shown that each regulatory instrument (emission taxes and quotas; design standards; and voluntary agreements) has a specific impact on the price-elasticity of the polluters’ demand for abatement services, hence on the market power of the eco-industry and the resulting cost of abatement. This implies that the optimal pollution tax will be higher than the marginal social cost of pollution, while a voluntary approach to pollution abatement may fail unless the eco-industry itself is willing to participate.We thank Dominique Bureau, Olivier Godard, Émeric Henry, Nicolas Marchetti, Alain-Désiré Nimubona, Anne Perrot, Gilles Rotillon, Katheline Schubert, the editors Michael Crew and Anthony Heyes, and two anonymous referees for helpful discussions and suggestions. We also acknowledge valuable comments from seminar audiences at HEC Montréal, the University of Paris I, the University of Toulouse, and the DG-Entreprise of the European Commission in Brussels. 相似文献
6.
We examine the efficiency of federal policies in a federation characterized by decentralized leadership, imperfect labor mobility
and transboundary pollution. Selfish regional governments regulate correlated pollutant emissions by choosing pollution tax
and abatement levels in anticipation of the center’s redistributive policy. The center’s objective function obeys a proportional
equity principle, which implies that its choice of interregional transfer satisfies the equalization of weighted regional
welfare levels. Regional and central governments make their choices subject to migration incentives. We show that the subgame
perfect equilibrium for the sequential game played by regional and central governments yields socially optimal policies.
An erratum to this article can be found at 相似文献
7.
We study the cost-effectiveness of inducing compliance in a program that caps aggregate emissions of a given pollutant from
a set of heterogeneous firms based on emissions standards and the relative cost-effectiveness of such a program with respect
to an optimally designed program based on tradable discharge permits. Our analysis considers abatement, monitoring and sanctioning
costs, as well as perfect and imperfect information on the part of the regulator with regard to the polluters’ abatement costs.
Under perfect information we find that (a) the total-cost-effective design of a program based on standards is one in which
the standards are firm specific and perfectly enforced, and (b) the total cost of an optimally designed program based on standards
is lower than the total cost of an optimally designed transferable emission permits system, except under special conditions.
This is true when it is optimum to induce perfect compliance and when it is not. Under imperfect information, nevertheless,
it is only by implementing a system of tradable permits and perfectly enforcing it with a constant marginal penalty tied to
the price of the permits, that the regulator can surmount the informational problem and at the same time minimize the total
cost of the program with certainty. 相似文献
8.
Alain-Désiré Nimubona 《Environmental and Resource Economics》2012,53(3):323-346
During the Doha Round at the World Trade Organization, reductions in trade barriers on environmental goods (EG) were put forward as a means of helping developed and developing countries alike deal with current environmental problems. We examine the potential effectiveness of such a strategy in a developing country that imports all its consumption of EG from an imperfectly competitive foreign eco-industry. We point out that trade liberalization of EG might in fact lead to less stringent pollution taxes, which can result in an actual rise in pollution levels. We then show that the environmental effectiveness objective of this trade reform can be achieved when the regulator uses quantitative abatement standards as an alternative pollution policy instrument. However, this environmental achievement comes at the expense of social welfare. 相似文献
9.
We study optimal pollution abatement under a mixed oligopoly when firms engage in emissions‐reducing research and development (R&D) with imperfect appropriation. The regulator uses a tax to curb emissions. Results show that in a mixed oligopoly, the public firm has positive emissions reduction in equilibrium; however, emissions reductions of the private firm could be positive or zero. Under certain conditions, the optimal pollution tax is positive; otherwise, the tax reverts to a subsidy. Comparing mixed and private duopolies, privatisation leads to reductions in R&D and output, but to an increase in overall emissions, so privatisation tends to make the environment worse. 相似文献
10.
Chao-Ning Liao 《Journal of Regulatory Economics》2009,35(2):135-153
By using a newly proposed tradable permit system built under the current air pollution fee regulation for the control of Total
Suspended Particulates in Taiwan as an example, a mixed-integer non-linear programming model that minimizes the total regulatory
costs of firms is applied to investigate how different permit trading ratios and the design of banking might affect firms’
technology adoption decisions and permit trading behavior. By incorporating binary variables in the model to represent firms’
decisions as to whether or not to install new control equipment, the results show that when the unit air pollution fee rate
is higher than the firms’ abatement costs, the design of banking causes many firms to install new control equipment that results
in an over-reduction of emissions. If no air pollution fee is imposed, the trading ratio plays a more important role than
the reservation rate for banking in determining the firms’ emission reduction strategies under a pure permit trading scheme.
While the conclusion from this study that uses a non-uniformly mixed pollutant as an example may hold only when certain conditions
are met, the framework can be applied to other uniformly mixed pollutants through parameter changes without any limitation.
In addition, the modeling technique presented here offers policy-makers a very convenient approach to empirical analysis.
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11.
This article specifies what an optimal pollution tax should be when dealing with a vertical Cournot oligopoly. Polluting firms
sell final goods to consumers and outsource their abatement activities to an environment industry. It is assumed that both
markets are imperfectly competitive. Thus, the tax is a single instrument used to regulate three sorts of distortions, one
negative externality and two restrictions in production. Consequently, the optimal tax rate is the result of a trade-off that
depends on the firms’ market power along the vertical structure. A detailed analysis of Cournot-Nash equilibria in both markets
is also performed. In this context, the efficiency of abatement activities plays a key-role. It gives a new understanding
to the necessary conditions for the emergence of an eco-industrial sector.
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12.
It is widely recognized that industrialized countries’ commitments under the Kyoto Protocol to reduce their greenhouse-gas
emissions will be far less costly to achieve if they can be met at least in part through investment in cheap abatement options
available in developing countries, as is permitted under the Protocol’s Clean Development Mechanism. Developing-country NGOs
and others involved in the policy debate on the CDM have frequently raised concerns, however, about the so-called “low-hanging
fruit” problem. The standard characterization of this problem is that if developing countries allow their cheap abatement
options to be used now, they may find themselves worse off in future when they take on emissions-reduction commitments of
their own, because only expensive abatement options will remain. We show that under plausible CDM-market imperfections a low-hanging
fruit problem may indeed arise, but that the standard characterization of the problem is incorrect. We also present a potential
solution, based on mandating a “virtual” option clause in CDM-investment contracts. 相似文献
13.
Nonpoint Source Pollution Taxes and Excessive Tax Burden 总被引:1,自引:0,他引:1
If a regulator is unable to measure firms’ individual emissions, an ambient tax can be used to achieve the socially desired
level of pollution. With this tax, each firm pays a unit tax on aggregate emissions. In order for the tax to be effective,
firms must recognize that their decisions affect aggregate emissions. When firms behave strategically with respect to the
tax-setting regulator, under plausible circumstances their tax burden is lower under an ambient tax, relative to the tax which
charges firms on the basis of individual emissions. Firms may prefer the case where the regulator is unable to observe individual
firm emissions, even if this asymmetric information causes the regulator to tax each firm on the basis of aggregate emissions. 相似文献
14.
Abuse of EU Emissions Trading for Tacit Collusion 总被引:1,自引:0,他引:1
Karl-Martin Ehrhart Christian Hoppe Ralf Löschel 《Environmental and Resource Economics》2008,41(3):347-361
In this paper, we show that loopholes in EU emissions trading law foster tacit collusion that impacts oligopolistic product
markets. The abuses originate from the covert misuse of EU emissions trading institutions, such as pooling or project-based
mechanisms. We analyse two types of these loopholes by means of game theoretical methods to show how oligopolistic firms establish
output restrictions, even if those firms are price takers on the~permit market (which might actually be the case for the majority
of obligated firms in the EU). The identified misuse of emissions trading law increases firms’ profits, decreases the consumers’
surplus and has negative effects on social welfare for specified parameter ranges. Consequently, public authorities should
not allow emissions trading’s overall good reputation—based upon its efficient abatement of pollution—to blind them to options
in European emissions trading legislation that would eventually restrict competition.
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15.
Standards and the regulation of environmental risk 总被引:1,自引:1,他引:0
We study regulatory design for a pollution-generating firm who is better informed than the regulator regarding pollution mitigation
possibilities, and who chooses an unobservable action when employing a particular mitigation plan. We distinguish among performance,
process, and design standards, and study the relative merit of each type of regulatory instrument. Relative to previous work
on standards design, we emphasize technology and process verification. An optimal performance standard is relatively strict
when regulator and firm preferences are congruent, but the regulator may prefer no performance standard at all if verification
costs are sufficiently high. A process standard unambiguously increases expected surplus (relative to no regulation) in some
environments, and otherwise improves welfare only when it is unlikely to generate a “bad” technology choice by the firm. A
design standard can improve welfare if the regulator is sufficiently well informed about the technological possibilities for
pollution control, but only when the firm’s private benefits from technology choice are sufficiently small. 相似文献
16.
Citizens and organizations representing them play an increasingly important role in markets for environmental quality, but
much remains to be learned about how their participation affects these markets. We analyze the effects of allowing a community
of citizens to trade pollution permits in an imperfectly competitive permit market. Allowing the community to trade directly
reveals its preferences, which enhances welfare. However, community participation may also exacerbate distortions due to market
power, even though the community itself trades competitively. Including the community in permit distribution may exacerbate
market power distortions by affecting a dominant trader’s propensity to participate in the permit market. Second, the community’s
demand/supply for permits may be more inelastic than other traders and worsen distortions due to market power. We illustrate
in an example that these negative effects on competition can dominate the positive effect from preference revelation through
the market place.
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17.
The Integrated Pollution and Prevention Control (IPPC) directive from the European Union implies that regulatory emission caps shall be set in accordance with each industry’s
Best Available Techniques (BAT). The directive, which represents a harmonization of environmental regulations towards a BAT principle, is currently
being implemented in all the EU member states and the states associated with the European Economic Area. The aim of this paper
is to examine the effect of this implementation on emission reductions and costs, using data from Norwegian manufacturing
industries. Data Envelopment Analysis (DEA) is used to construct a frontier of all efficient installations. The frontier is based on all installations within an
industry that use the Best Practice Technique (BPT). We estimate the changes in emissions due to the implementation of IPPC as the difference between an installation’s
actual emissions and the emissions that would occur if it operated on the frontier. The method reveals a strong potential
for emission reductions. Further, estimates of short-run abatement costs indicate that considerable emission reductions can
be achieved with low or no costs, but that the implementation of a strict BAT principle for all installations involves substantial
costs. To the extent that the abatement costs of an installation would be excessive, IPPC includes some limited modifications
of the strict BAT principle. It seems important that these modifications are fully utilized by authorities to achieve the
most cost efficient implementation of the directive.
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18.
To Comply or Not To Comply? Pollution Standard Setting Under Costly Monitoring and Sanctioning 总被引:2,自引:0,他引:2
Carmen Arguedas 《Environmental and Resource Economics》2008,41(2):155-168
In this paper, we characterize optimal regulatory policies composed of a pollution standard, a probability of inspection and
a fine for non-compliance, in a context where both monitoring and sanctioning are socially costly, and the penalty may include
gravity and non-gravity components at the regulator’s discretion. Under given penalties, the optimal policy entails compliance
with the standard as long as a quite intuitive condition is met. Non-compliant policies may include standards even below the
pollution levels that minimize the sum of abatement costs and external damages. Interestingly, the appropriate structure of
the penalty under non-compliance is highly progressive, while the best possible shape of the fine under compliance is linear.
If the regulator is entitled to choose the structure of the fine, linear penalties are socially preferred and the optimal
policy induces compliance.
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19.
This paper analyses the conditions under which a group of firms have the incentive to sign a voluntary agreement (VA) to control
polluting emissions even in the presence of free-riding by other firms in the industry. We consider a policy framework in
which firms in a given industry decide whether or not to sign a VA proposed by an environmental regulator. We identify the
features that a VA should possess in order to provide firms with an incentive to participate in the VA and to enhance its
economic and environmental effectiveness. Under very general conditions on the shape of the demand schedule, we obtain the
following results. First, a VA does not belong to the equilibrium of the coalition game when benefits from voluntary emission
abatement are a pure public good, unless an industry emission target is set by the regulator. Second, in the presence of partial
spillovers—i.e. when signatories obtain more benefits from the VA than non-signatories—a VA can belong to the equilibrium
only if a minimum participation rule is guaranteed. Third, a VA with a minimum participation rule and a minimum mandatory
emission abatement may improve welfare (and even industry profits) compared to a VA in which firms are free to set their own
profit maximizing abatement level. 相似文献
20.
《Ecological Economics》2001,36(3):461-473
Traditional environmental theory suggests that the optimal level of a pollution emission occurs when the marginal damage created by the emissions is equal to the marginal cost of reducing the emissions. We argue that the benefits from reducing pollution should be much more broadly defined to include at least three other sources of benefits. First, we develop a game-theoretic model in which firms may under-invest in cost-saving ‘green technologies’. Second, we demonstrate that consideration of future damages and abatement costs leads to a lower current optimal pollution level than that obtained in traditional models. Finally, we show that ecological complexity creates indirect pathways by which greater pollution increases the likelihood of generating irreversible environmental damage. This broader definition of the benefits of pollution abatement yields an optimal level of pollution that may actually be less than the level at which conventionally-measured marginal damages are equal to marginal abatement costs. Thus, environmental policy should be stricter. 相似文献