The Choice of Policy Instruments to Control Pollution under Costly Enforcement and Incomplete Information
AbstractWe analyze the cost of enforcing a system of firm specific emissions standards vis a vis a transferable emissions permit system in the context of complete and incomplete information. We also examine the optimality of a transferable emissions permit system when abatement costs and enforcement costs are considered. We show that under incomplete information, regulation based on each firm-specific emissions standards cannot be less costly than a transferable emissions permit system. In addition, we found that the distribution of emissions that minimize aggregate program costs differ from the distribution of emissions generated by a competitive transferable emissions permit system.
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Bibliographic InfoPaper provided by Departamento de Economía, Universidad de Concepción in its series Working Papers with number 01-2009.
Date of creation: 2009
Date of revision:
Environmental policy; cost-effectiveness; enforcement costs; incomplete information.;
Other versions of this item:
- Carlos A. Chávez & Mauricio G. Villena & John K.Stranlund, 2009. "The choice of policy instruments to control pollution under costly enforcement and incomplete information," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 207-227, November.
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
- K32 - Law and Economics - - Other Substantive Areas of Law - - - Environmental, Health, and Safety Law
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-02-05 (All new papers)
- NEP-CTA-2010-02-05 (Contract Theory & Applications)
- NEP-ENE-2010-02-05 (Energy Economics)
- NEP-ENV-2010-02-05 (Environmental Economics)
- NEP-REG-2010-02-05 (Regulation)
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- Rohling, Moritz & Ohndorf, Markus, 2012.
"Prices vs. Quantities with fiscal cushioning,"
Resource and Energy Economics,
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- Clara Villegas-Palacio & Jessica Coria, 2010. "On the interaction between imperfect compliance and technology adoption: taxes versus tradable emissions permits," Journal of Regulatory Economics, Springer, vol. 38(3), pages 274-291, December.
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- Marcelo Caffera & Carlos Chávez, 2011. "The Cost-Effective Choice of Policy Instruments to Cap Aggregate Emissions with Costly Enforcement," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 50(4), pages 531-557, December.
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