Transaction Costs, Economic Instruments And Environmental Policies
AbstractThis study has attempted to distinguish the alternative forms of transaction costs referred to the environmental policy literature and to bring these transaction costs into a unified theory. The optimal choice of economic instrument between Pigouvian taxes and tradable permits is shown to depend on the level of transaction costs as opposed to the standard model where both emission taxes and permits are first best policies to achieve a level of emissions. It is demonstrated that inclusion of transaction costs decreases the socially optimal emission level as compared to the standard model. Instrument selection is affected by the functional specification for instrument costs for both firm and regulator level. Depending on the nature of these costs optimal economic instruments will be different.
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Bibliographic InfoPaper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 1999 Annual meeting, August 8-11, Nashville, TN with number 21588.
Date of creation: 1999
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Transaction Costs; Economic Instrument Selection; Environmental Economics and Policy; Industrial Organization;
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