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Taxes, Permits and the Adoption of Abatement Technology under Imperfect Compliance

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Author Info
Villegas, Clara () (Department of Economics, School of Business, Economics and Law, Göteborg University)
Coria, Jessica () (Department of Economics, School of Business, Economics and Law, Göteborg University)

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Abstract

his paper analyzes the effects of the choice between price-based and quantity-based emission regulations on compliance incentives and social welfare in the presence of incomplete enforcement and technology adoption. We show that in contrast to taxes, the extent of violations under tradable emission permits (TEPs) decreases with the rate of technology adoption. However, in terms of welfare, the ranking of the instruments is not so straightforward: taxes induce lower emission damages while TEPs induce lower abatement, investment, and expected enforcement costs. Thereby, the overall ranking depends on the extent to which these effects offset each other.

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File URL: http://hdl.handle.net/2077/20420
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Publisher Info
Paper provided by Göteborg University, Department of Economics in its series Working Papers in Economics with number 368.

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Length: 29 pages
Date of creation: 16 Jun 2009
Date of revision:
Handle: RePEc:hhs:gunwpe:0368

Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, Göteborg University Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Related research
Keywords: Technological adoption; environmental policy; imperfect compliance; enforcement; social welfare;

Find related papers by JEL classification:
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
L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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This page was last updated on 2009-11-19.

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