Second Best Environmental Policies under Uncertainty
AbstractWe construct a strategic trade model of an international duopoly, whereby production by exporting firms generates a local pollutant. Governments use environmental policies, i.e., an emissions standard or a tax, to control pollution and for rent shifting purposes. Contrary to their firm, however, governments are unable to perfectly foresee the actual level of demand, the cost of abatement and the damage caused from pollution. Under these modes of uncertainty we derive sufficient conditions under which the governments optimally choose an emissions tax over an emissions standard.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2010.3.
Date of creation: Jan 2010
Date of revision:
Strategic Environmental Policy; Pollution; Choice of Policy Instrument; Uncertainty;
Other versions of this item:
- Fabio Antoniou & Panos Hatzipanayotou & Phoebe Koundouri, 2012. "Second Best Environmental Policies under Uncertainty," Southern Economic Journal, Southern Economic Association, vol. 78(3), pages 1019-1040, January.
- Panos Hatzipanayotou & Fabio Antoniou & Phoebe Koundouri, . "Second Best Environemntal Policies Under Uncertainty," DEOS Working Papers 1005, Athens University of Economics and Business.
- 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.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
- F18 - International Economics - - Trade - - - Trade and Environment
- 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-2010-03-06 (All new papers)
- NEP-ENE-2010-03-06 (Energy Economics)
- NEP-ENV-2010-03-06 (Environmental Economics)
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