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Group rewards and individual sanctions in environmental policy

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  • Bouwe R. Dijkstra
  • Dirk T.G. Rübbelke

Abstract

We examine an incentive scheme for a group of agents, where all agents are rewarded if the group meets its target. If the group does not meet its target, only the agents that meet their individual target are rewarded. In environmental policy, the EU burden sharing agreement and the UK Climate Change Agreements feature this incentive scheme. There is only a difference in outcome between group and individual rewards if emissions are stochastic. Group rewards generally lead to higher expected emissions than individual rewards. The attraction of the group reward scheme may lie in its fairness and its tough-looking targets.

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Paper provided by University of Nottingham, School of Economics in its series Discussion Papers with number 07/01.

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Handle: RePEc:not:notecp:07/01

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Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD
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Keywords: Team incentive scheme; stochastic pollution; UK Climate Change Agreements;

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Cited by:
  1. Barbot, Cristina & Betancor, Ofelia & Socorro, M. Pilar & Viecens, M. Fernanda, 2014. "Trade-offs between environmental regulation and market competition: Airlines, emission trading systems and entry deterrence," Transport Policy, Elsevier, vol. 33(C), pages 65-72.
  2. Bouwe R. Dijkstra & Dirk T.G. Rübbelke, 2007. "Group Rewards and Individual Sanctions in Environmental Policy," Working Papers 2007.44, Fondazione Eni Enrico Mattei.

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