Regulation of a Spatial Externality: Refuges versus Tax for Managing Pest Resistance |
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Authors: | Stefan Ambec Marion Desquilbet |
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Institution: | (1) Resources for the Future, 1616 P. Street NW, Washington DC, 20036, USA |
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Abstract: | We examine regulations for managing pest resistance to pesticide varieties in a temporally and spatially explicit framework.
We compare the performance of the EPA’s mandatory refuges and a tax (or subsidy) on the pesticide variety under several biological
assumptions on pest mobility and the heterogeneity of farmers’ pest vulnerability. We find that only the tax (or subsidy)
restores efficiency if pest mobility is perfect within the area. If pest mobility is imperfect and when farmers face identical
pest vulnerability, only the refuge might restore efficiency. With simulations we illustrate that complex outcomes may arise
for intermediate levels of pest mobility and farmers’ heterogeneity. Our results shed light on the choice of regulatory instruments
for common-pool resource regulations where spatial localization matters. |
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