Advanced Search
MyIDEAS: Login to save this paper or follow this series

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

Contents:

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)

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.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://hdl.handle.net/2077/20420
Download Restriction: no

Bibliographic Info

Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 368.

as in new window
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, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
More information through EDIRC

Related research

Keywords: Technological adoption; environmental policy; imperfect compliance; enforcement; social welfare;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Baldursson, F.M. & von der Fehr, N.-H. M., 1998. "Prices vs Quantities: The Irrelevance of Irreversibility," Memorandum, Oslo University, Department of Economics 09/1998, Oslo University, Department of Economics.
  2. Malik, Arun S., 1990. "Markets for pollution control when firms are noncompliant," Journal of Environmental Economics and Management, Elsevier, vol. 18(2), pages 97-106, March.
  3. Friesen, Lana, 2001. "Targeting Enforcement to Improve Compliance with Environmental Regulations," 2001 Conference (45th), January 23-25, 2001, Adelaide, Australian Agricultural and Resource Economics Society 125634, Australian Agricultural and Resource Economics Society.
  4. Finkelshtain, Israel & Kislev, Yoav, 1997. "Prices versus Quantities: The Political Perspective," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 105(1), pages 83-100, February.
  5. Hoel, Michael & Karp, Larry, 2002. "Taxes versus quotas for a stock pollutant," Resource and Energy Economics, Elsevier, Elsevier, vol. 24(4), pages 367-384, November.
  6. Inés Macho-Stadler, 2006. "Environmental Regulation: Choice of Instruments under Imperfect Compliance," Working Papers 189, Barcelona Graduate School of Economics.
  7. John K. Stranlund, 2006. "The Regulatory Choice of Noncompliance in Emissions Trading Programs," Working Papers, University of Massachusetts Amherst, Department of Resource Economics 2006-7, University of Massachusetts Amherst, Department of Resource Economics.
  8. Stranlund, John K & Chavez, Carlos A, 2000. "Effective Enforcement of a Transferable Emissions Permit System with a Self-Reporting Requirement," Journal of Regulatory Economics, Springer, Springer, vol. 18(2), pages 113-31, September.
  9. Requate, Till & Unold, Wolfram, 2003. "Environmental policy incentives to adopt advanced abatement technology:: Will the true ranking please stand up?," European Economic Review, Elsevier, Elsevier, vol. 47(1), pages 125-146, February.
  10. John K. Stranlund & Carlos A. Chavez & Mauricio G. Villena, 2007. "The Optimal Pricing of Pollution When Enforcement is Costly," Working Papers, University of Massachusetts Amherst, Department of Resource Economics 2007-6, University of Massachusetts Amherst, Department of Resource Economics.
  11. Harford, Jon D., 1978. "Firm behavior under imperfectly enforceable pollution standards and taxes," Journal of Environmental Economics and Management, Elsevier, vol. 5(1), pages 26-43, March.
  12. Harford, Jon D., 1987. "Self-reporting of pollution and the firm's behavior under imperfectly enforceable regulations," Journal of Environmental Economics and Management, Elsevier, vol. 14(3), pages 293-303, September.
  13. E. Hentschel & A. Randall, 2000. "An Integrated Strategy to Reduce Monitoring and Enforcement Costs," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 15(1), pages 57-74, January.
  14. Kaplow, Louis & Shavell, Steven, 1994. "Optimal Law Enforcement with Self-Reporting of Behavior," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 102(3), pages 583-606, June.
  15. Montero, Juan-Pablo, 2002. "Prices versus quantities with incomplete enforcement," Journal of Public Economics, Elsevier, Elsevier, vol. 85(3), pages 435-454, September.
  16. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
  17. Adam Jaffe & Richard Newell & Robert Stavins, 2002. "Environmental Policy and Technological Change," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 22(1), pages 41-70, June.
  18. Till Requate & Wolfram Uunold, 2001. "On the Incentives Created by Policy Instruments to Adopt Advanced Abatement Technology if Firms are Asymmetric," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, Mohr Siebeck, Tübingen, vol. 157(4), pages 536-, December.
  19. Sandra Rousseau & Stef Proost, 2005. "Comparing Environmental Policy Instruments in the Presence of Imperfect Compliance – A Case Study," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 32(3), pages 337-365, November.
  20. Harrington, Winston, 1988. "Enforcement leverage when penalties are restricted," Journal of Public Economics, Elsevier, Elsevier, vol. 37(1), pages 29-53, October.
  21. Malik, Arun S, 1992. "Enforcement Costs and the Choice of Policy Instruments for Controlling Pollution," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 30(4), pages 714-21, October.
  22. Amacher, Gregory S. & Malik, Arun S., 1998. "Instrument Choice When Regulators and Firms Bargain," Journal of Environmental Economics and Management, Elsevier, vol. 35(3), pages 225-241, May.
  23. Philippe Quirion, 2004. "Prices versus Quantities in a Second-Best Setting," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 29(3), pages 337-359, November.
  24. 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.
  25. Jones, Carol Adaire & Scotchmer, Suzanne, 1990. "The social cost of uniform regulatory standards in a hierarchical government," Journal of Environmental Economics and Management, Elsevier, vol. 19(1), pages 61-72, July.
  26. Jung, Chulho & Krutilla, Kerry & Boyd, Roy, 1996. "Incentives for Advanced Pollution Abatement Technology at the Industry Level: An Evaluation of Policy Alternatives," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 95-111, January.
  27. Milliman, Scott R. & Prince, Raymond, 1989. "Firm incentives to promote technological change in pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 17(3), pages 247-265, November.
  28. Sandra Rousseau, 2007. "Timing of environmental inspections: survival of the compliant," Journal of Regulatory Economics, Springer, Springer, vol. 32(1), pages 17-36, August.
  29. Agnar Sandmo, 2002. "Efficient Environmental Policy with Imperfect Compliance," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 23(1), pages 85-103, September.
  30. Moledina, Amyaz A. & Coggins, Jay S. & Polasky, Stephen & Costello, Christopher, 2003. "Dynamic environmental policy with strategic firms: prices versus quantities," Journal of Environmental Economics and Management, Elsevier, vol. 45(2, Supple), pages 356-376, March.
  31. Requate, Till, 2005. "Dynamic incentives by environmental policy instruments--a survey," Ecological Economics, Elsevier, Elsevier, vol. 54(2-3), pages 175-195, August.
  32. Harford, Jon D. & Harrington, Winston, 1991. "A reconsideration of enforcement leverage when penalties are restricted," Journal of Public Economics, Elsevier, Elsevier, vol. 45(3), pages 391-395, August.
  33. Harford, Jon D., 1991. "Measurement error and state-dependent pollution control enforcement," Journal of Environmental Economics and Management, Elsevier, vol. 21(1), pages 67-81, July.
  34. Till Requate, 1995. "Incentives to adopt new technologies under different pollution-control policies," International Tax and Public Finance, Springer, Springer, vol. 2(2), pages 295-317, August.
  35. Livernois, John & McKenna, C. J., 1999. "Truth or consequences: Enforcing pollution standards with self-reporting," Journal of Public Economics, Elsevier, Elsevier, vol. 71(3), pages 415-440, March.
  36. Malik Arun S., 1993. "Self-Reporting and the Design of Policies for Regulating Stochastic Pollution," Journal of Environmental Economics and Management, Elsevier, vol. 24(3), pages 241-257, May.
  37. Stranlund, John K. & Dhanda, Kanwalroop Kathy, 1999. "Endogenous Monitoring and Enforcement of a Transferable Emissions Permit System," Journal of Environmental Economics and Management, Elsevier, vol. 38(3), pages 267-282, November.
  38. Roberts, Marc J. & Spence, Michael, 1976. "Effluent charges and licenses under uncertainty," Journal of Public Economics, Elsevier, Elsevier, vol. 5(3-4), pages 193-208.
  39. Lai, Ching-Chong & Yang, Chih-Yu & Chang, Juin-Jen, 2003. "Environmental Regulations and Social Norms," International Tax and Public Finance, Springer, Springer, vol. 10(1), pages 63-75, January.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Carmen Arguedas & Eva Camacho & José Zofío, 2010. "Environmental Policy Instruments: Technology Adoption Incentives with Imperfect Compliance," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 47(2), pages 261-274, October.
  2. Coria, Jessica & Villegas-Palacio, Clara, 2010. "Targeted Enforcement and Aggregate Emissions With Uniform Emission Taxes," Working Papers in Economics, University of Gothenburg, Department of Economics 455, University of Gothenburg, Department of Economics.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:hhs:gunwpe:0368. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marie Andersson).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.