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.:
- van Soest, Daan P., 2005. "The impact of environmental policy instruments on the timing of adoption of energy-saving technologies," Resource and Energy Economics, Elsevier, Elsevier, vol. 27(3), pages 235-247, October.
- Fang, Guochang & Tian, Lixin & Fu, Min & Sun, Mei, 2013. "The impacts of carbon tax on energy intensity and economic growth – A dynamic evolution analysis on the case of China," Applied Energy, Elsevier, vol. 110(C), pages 17-28.
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"On the optimal timing of switching from non-renewable to renewable resources: dirty vs clean energy sources and the relative efficiency of generators,"
wp855, Dipartimento Scienze Economiche, Universita' di Bologna.
- Elettra Agliardi & Luigi Sereno, 2013. "On the Optimal Timing of Switching from non-Renewable to Renewable Resources: Dirty vs Clean Energy Sources and the Relative Efficiency of Generators," Working Paper Series, The Rimini Centre for Economic Analysis 11_13, The Rimini Centre for Economic Analysis.
- Rong Zhou & Kathleen Segerson, 2012. "Are Green Taxes a Good Way to Help Solve State Budget Deficits?," Sustainability, MDPI, Open Access Journal, vol. 4(6), pages 1329-1353, June.
- Agliardi, Elettra & Sereno, Luigi, 2012.
"Environmental protection, public finance requirements and the timing of emission reductions,"
Environment and Development Economics,
Cambridge University Press, vol. 17(06), pages 715-739, December.
- Elettra Agliardi & Luigi Sereno, 2011. "Environmental Protection, Public Finance Requirements and the Timing of Emission Reductions," Working Paper Series, The Rimini Centre for Economic Analysis 53_11, The Rimini Centre for Economic Analysis.
- Kast, Robert & Lapied, AndrÃ© & Roubaud, David, 2014. "Modelling under ambiguity with dynamically consistent Choquet random walks and Choquetâ€“Brownian motions," Economic Modelling, Elsevier, Elsevier, vol. 38(C), pages 495-503.
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