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Indirect Methods for Regulating Externalities Under Uncertainty

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  • Evan F. Koenig

Abstract

It is sometimes necessary or appropriate to correct an externality by intervening in the market for a privately traded commodity with which the externality is linked. In these situations ad valorem taxation is a viable policy option. It is argued that some combination of specific and ad valorem taxes will always outperform regulations which fix price administratively, but that quantity standards may outperform taxes. The analysis is applied to a problem in international trade.

Suggested Citation

  • Evan F. Koenig, 1985. "Indirect Methods for Regulating Externalities Under Uncertainty," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(2), pages 479-493.
    • Handle: RePEc:oup:qjecon:v:100:y:1985:i:2:p:479-493.
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    File URL: http://hdl.handle.net/10.2307/1885392
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    References listed on IDEAS

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    Cited by:

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    2. Boyer, Marcel & Laffont, Jean-Jacques, 1997. "Environmental risks and bank liability," European Economic Review, Elsevier, vol. 41(8), pages 1427-1459, August.
    3. Iltae Kim & Sang-Ho Lee, 2002. "Comparison between optimal output tax and ad valorem tax for a polluting oligopolist under demand uncertainty," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 5(1), pages 1-15, March.
    4. Batabyal, Amitrajeet A., 1995. "Leading issues in domestic environmental regulation: A review essay," Ecological Economics, Elsevier, vol. 12(1), pages 23-39, January.
    5. Haim Shalit, 1995. "Mean-Gini analysis of stochastic externalities: The case of groundwater contamination," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 6(1), pages 37-52, July.
    6. Corato, Luca Di & Maoz, Yishay D., 2023. "Externality control and endogenous market structure under uncertainty: The price vs. quantity dilemma," Journal of Economic Dynamics and Control, Elsevier, vol. 150(C).
    7. Lee, Sang-Ho & Kim, Jae-Cheol, 1995. "Oligopolistic incentives for pollution control with nonzero conjectures," Economics Letters, Elsevier, vol. 49(1), pages 95-99, July.
    8. Ko, Il-Dong, 1988. "Issues in the control of stock externality problems with inflexible policy measures," ISU General Staff Papers 198801010800009859, Iowa State University, Department of Economics.

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