Regulation via the Polluter-Pays Principle
AbstractWe consider the problem of regulating an economy with environmental pollution. We examine the distributional impact of the polluter-pays principle which requires that any agent compensates all other agents for the damages caused by his or her (pollution) emissions. With constant marginal damages we show that regulation via the polluter-pays principle leads to the unique welfare distribution that assigns non-negative individual welfare and renders each agent responsible for his or her pollution impact. We extend both the polluter-pays principle and this result to increasing marginal damages due to pollution. We also discuss the acceptability of the polluter-pays principle and compare it with the Vickrey-Clark-Groves mechanism.
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Bibliographic InfoPaper provided by Universite de Montreal, Departement de sciences economiques in its series Cahiers de recherche with number 2011-01.
Length: 31 pages
Date of creation: 2011
Date of revision:
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More information through EDIRC
Regulation; Polluter-Pays Principle; Responsibility for Pollution Impact; Externalities.;
Other versions of this item:
- Ambec, Stefan & Ehlers, Lars, 2010. "Regulation via the Polluter-Pays Principle," LERNA Working Papers 10.18.324, LERNA, University of Toulouse.
- AMBEC, Stefan & EHLERS, Lars, 2011. "Regulation via the Polluter-Pays Principle," Cahiers de recherche 01-2011, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- D30 - Microeconomics - - Distribution - - - General
- D6 - Microeconomics - - Welfare Economics
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