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Cooperative and noncooperative protection against transferable and filterable externalities

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  • Jason Shogren
  • Thomas Crocker

Abstract

Given self-protection from an undesirable environmental externality, we examine, under several conditions, the efficiency properties of cooperative and noncooperative behavior. We demonstrate that if self-protection can transfer the externality to another agent, then noncooperative behavior will lead to overprotection. If self-protection filters or dilutes the externality, then noncooperation leads to underprotection. In addition, overprotection will worsen if an agent with more relative power is allowed a first-mover advantage or if the damage function is elastic and transferability is uncertain. Finally, a reduction in uncertainty about transferability will accentuate overprotection if the damage function is inelastic. Our results suggest that coordination of protection activities among agents will enhance the overall gains from environmental policy in the European Single Internal Market of 1992. Coordination minimizes the costs of environmental protection, thereby reducing the public credibility of its foes. Copyright Kluwer Academic Publishers 1991

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File URL: http://hdl.handle.net/10.1007/BF00310018
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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental & Resource Economics.

Volume (Year): 1 (1991)
Issue (Month): 2 (June)
Pages: 195-214

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Handle: RePEc:kap:enreec:v:1:y:1991:i:2:p:195-214

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Web page: http://www.springerlink.com/link.asp?id=100263

Related research

Keywords: Self-protection; externality; transferability;

References

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  1. Shogren, Jason F, 1990. " The Impact of Self-protection and Self-insurance on Individual Response to Risk," Journal of Risk and Uncertainty, Springer, vol. 3(2), pages 191-204, June.
  2. Shogren, Jason F & Baik, Kyung H, 1992. " Favorites and Underdogs: Strategic Behavior in an Experimental Contest," Public Choice, Springer, vol. 74(2), pages 191-205, September.
  3. Shogren, Jason F., 1989. "Political Economy of Government Regulation (The)," Staff General Research Papers 294, Iowa State University, Department of Economics.
  4. Jason F. Shogren, 1990. "Impact of Self-Protection and Self-Insurance on Individual Response to Risk, The," Center for Agricultural and Rural Development (CARD) Publications 90-wp53, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  5. Shogren, Jason F & Baik, Kyung H, 1991. " Reexamining Efficient Rent-Seeking in Laboratory Markets," Public Choice, Springer, vol. 69(1), pages 69-79, February.
  6. Smith, Vernon L, 1980. "Experiments with a Decentralized Mechanism for Public Good Decisions," American Economic Review, American Economic Association, vol. 70(4), pages 584-99, September.
  7. Bird, Peter J. W. N., 1987. "The transferability and depletability of externalities," Journal of Environmental Economics and Management, Elsevier, vol. 14(1), pages 54-57, March.
  8. Smith, V Kerry & Desvousges, William H, 1987. "An Empirical Analysis of the Economic Value of Risk Changes," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 89-114, February.
  9. Sterner, Thomas, 1990. "An international tax on pollution and natural resource depletion," Energy Policy, Elsevier, vol. 18(3), pages 300-302, April.
  10. Sandler, Todd & Lapan, Harvey E., 1988. "The Calculus of Dissent: An Analysis of Terrorists' Choice of Targets," Staff General Research Papers 10818, Iowa State University, Department of Economics.
  11. Lave, Lester B, 1982. "Mitigating Strategies for Carbon Dioxide Problems," American Economic Review, American Economic Association, vol. 72(2), pages 257-61, May.
  12. Dixit, Avinash K, 1987. "Strategic Behavior in Contests," American Economic Review, American Economic Association, vol. 77(5), pages 891-98, December.
  13. Smith, Vernon L, 1982. "Microeconomic Systems as an Experimental Science," American Economic Review, American Economic Association, vol. 72(5), pages 923-55, December.
  14. Thomas D. Crocker & Jason F. Shogren, 1990. "Ex Ante Valuation of Atmospheric Visibility," Center for Agricultural and Rural Development (CARD) Publications 90-wp56, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  15. V. Kerry Smith & William H. Desvousges & F. Reed Johnson & Ann Fisher, 1990. "Can public information programs affect risk perceptions?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 9(1), pages 41-59.
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Citations

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Cited by:
  1. Anthony Heyes, 2001. "A Note on Defensive Expenditures: Harmonised Law, Diverse Results," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 19(3), pages 257-266, July.
  2. Halkos, George, 1994. "A game-theoretic approach to pollution control problems," MPRA Paper 33259, University Library of Munich, Germany.
  3. Travis Warziniack & David Finnoff & Jonathan Bossenbroek & Jason Shogren & David Lodge, 2011. "Stepping Stones for Biological Invasion: A Bioeconomic Model of Transferable Risk," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 50(4), pages 605-627, December.
  4. Antoci, Angelo & Borghesi, Simone, 2012. "Preserving or escaping? On the welfare effects of environmental self-protective choices," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(2), pages 248-254.
  5. Ian A. MacKenzie, 2009. "Controlling externalities in the presence of rent seeking," CER-ETH Economics working paper series 09/111, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  6. Antoci, Angelo & Sodini, Mauro, 2009. "Indeterminacy, bifurcations and chaos in an overlapping generations model with negative environmental externalities," MPRA Paper 13750, University Library of Munich, Germany.
  7. repec:dgr:uvatin:2098065 is not listed on IDEAS
  8. Angelo Antoci, 2005. "Environmental Resources Depletion and Interplay Between Negative and Positive Externalities in a Growth Model," Working Papers 2005.9, Fondazione Eni Enrico Mattei.
  9. Jeroen C.J.M. van den Bergh, 1998. "Materials, Capital, Direct/Indirect Substitution and Mass Balance Production Functions," Tinbergen Institute Discussion Papers 98-065/3, Tinbergen Institute.

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