Second Best Environmental Policies under Uncertainty
AbstractGovernments use environmental policies, such as an emissions standard or a tax, to control pollution and for rent shifting purposes. Contrary to firms, however, governments are unable to perfectly foresee the actual level of demand and the cost of abatement. Our results suggest that not only the presence but also the absolute level of uncertainty matters for the optimal choice of the environmental policy instrument. Moreover, the optimality conditions under strategic behavior may lead to welfare losses relative to the cooperative outcomes because of under-regulation and lack of policy coordination between the two countries.
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Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 78 (2012)
Issue (Month): 3 (January)
Other versions of this item:
- Fabio Antoniou & Panos Hatzipanayotou & Phoebe Koundouri, 2010. "Second Best Environmental Policies under Uncertainty," Environmental Economy and Policy Research Working Papers 49.2010, University of Cambridge, Department of Land Economics, revised 2010.
- Panos Hatzipanayotou & Fabio Antoniou & Phoebe Koundouri, . "Second Best Environemntal Policies Under Uncertainty," DEOS Working Papers 1005, Athens University of Economics and Business.
- Panos Hatzipanayotou & Panos Hatzipanayotou & Fabio Antoniou & Phoebe Koundouri, 2010. "Second Best Environmental Policies under Uncertainty," Working Papers 2010.3, Fondazione Eni Enrico Mattei.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F18 - International Economics - - Trade - - - Trade and Environment
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
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