The effects of environmental taxes and quotas on the optimal timing of emission reductions under Choquet–Brownian uncertainty
AbstractThe effects of two environmental policy options for the reduction of pollution emissions, i.e. taxes and non-tradable quotas, are analyzed. In contrast to the prior literature this work endogenously takes into account the level of emissions before and after the adoption of the new environmental policy. The level of emissions is determined by solving the firm's profit maximization problem under taxes and fixed quotas. We find that the optimal adoption threshold under taxes is always larger than the adoption threshold under fixed quota, even in a setting characterized by ecological uncertainty and ambiguity – in the form of Choquet–Brownian motions – on future costs and benefits over adopting environmental policies.
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Bibliographic InfoArticle provided by Elsevier in its journal Economic Modelling.
Volume (Year): 28 (2011)
Issue (Month): 6 ()
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Web page: http://www.elsevier.com/locate/inca/30411
Environmental taxation; Non-tradable quotas; Optimal implementation time; Choquet–Brownian uncertainty; Real options;
Other versions of this item:
- E. Agliardi & L. Sereno, 2011. "The effects of environmental taxes and quotas on the optimal timing of emission reductions under Choquet-Brownian uncertainty," Working Papers wp725, Dipartimento Scienze Economiche, Universita' di Bologna.
- Elettra Agliardi & Luigi Sereno, 2011. "The effects of environmental taxes and quotas on the optimal timing of emission reductions under Choquet-Brownian uncertainty," Discussion Papers 2011/109, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Environment and Development Economics,
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Working Paper Series
11_13, The Rimini Centre for Economic Analysis.
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