Experiments on Damage-Based Ambient Taxes for Nonpoint Source Polluters |
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| Authors: | Jordan F. Suter Christian A. Vossler Gregory L. Poe Kathleen Segerson |
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| Affiliation: | Jordan Suter is assistant professor, Department of Economics, Oberlin College. Christian Vossler is assistant professor, Department of Economics, and program coordinator, Institute for a Secure and Sustainable Environment, University of Tennessee. Gregory Poe is associate professor, Department of Applied Economics and Management, Cornell University. Kathleen Segerson is professor, Department of Economics, University of Connecticut. Funding for this project was provided by EPA STAR grant R83029-2002. The authors thank Rachel Croson, Kent Messer, and Bill Schulze for their helpful comments and suggestions. |
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| Abstract: | This article presents experimental tests of a linear and a nonlinear ambient tax mechanism that involve modest information requirements for the regulator. When agents are not allowed to communicate, both tax mechanisms result in emission levels that approximate the social optimum. When agents can communicate, emissions are considerably below the optimum, but we show that the tax function can be scaled to achieve social efficiency. Finally, by disaggregating the overall efficiency measure, we show that changing the pollution threshold that triggers the tax increases the inefficiency resulting from variation in agent-level decisions, but does not affect average emissions. |
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| Keywords: | communication damage-based taxes laboratory experiments nonlinear versus linear tax mechanisms nonpoint source pollution |
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