Weitzman revisited: Emission standards vs. taxes with uncertain control costs and market power of polluting firms
AbstractIt is well known that uncertainty concerning firms’ costs as well as market power of the latter have to be taken into account in order to design and choose environmental policy instruments in an optimal way. As a matter of fact, in most actual regulation settings the policy maker has to face both of these complications simultaneously. However, hitherto environmental economic theory has restricted to either of them when submitting conventional policy instruments to a comparative analysis. The article at hand takes a first step in closing this gap. It investigates the welfare effects of emission standards and taxes against the background of uncertain emission control costs and various degrees of the polluting firms’ market power.
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Bibliographic InfoPaper provided by Universitaet Augsburg, Institute for Economics in its series Discussion Paper Series with number 299.
Date of creation: Mar 2008
Date of revision:
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Cournot oligopoly; external diseconomies of pollution; cost uncertainty; emission standard; emission tax;
Other versions of this item:
- Clemens Heuson, 2008. "Weitzman revisited: Emission standards vs. taxes with uncertain control costs and market power of polluting firms," Working Papers 044, Bavarian Graduate Program in Economics (BGPE).
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-25 (All new papers)
- NEP-COM-2008-03-25 (Industrial Competition)
- NEP-ENE-2008-03-25 (Energy Economics)
- NEP-ENV-2008-03-25 (Environmental Economics)
- NEP-MIC-2008-03-25 (Microeconomics)
- NEP-RES-2008-03-25 (Resource Economics)
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