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Environmental Policy Instruments: Technology Adoption Incentives with Imperfect Compliance

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Author Info
Arguedas, Carmen () (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)
Camacho, Eva (Universidad Jaume I de Castellón)
Zofío, José Luis () (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid., Departamento de Análisis Económico: Teoría e Historia Económica. Universidad Autónoma de Madrid)

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Abstract

In this paper, we study the incentives to adopt advanced abatement technologies in the presence of imperfect compliance. Surprisingly, incentives to adopt advanced abatement technologies remain intact under emission taxes and pollution abatement subsidies when compared to the perfect compliance scenario. However, under emission standards imperfect compliance increases firms’ incentives to invest under certain assumptions, whereas under an emission permit mechanism investment incentives decrease only if widespread non-compliance induces a (sufficient) reduction in the permit price. Our results are valid for fairly general characteristics of the monitoring and enforcement strategies commonly found in both, theoretical and empirical applications.

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Publisher Info
Paper provided by Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History) in its series Working Papers in Economic Theory with number 2009/03.

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Length: 17 pages
Date of creation: May 2009
Date of revision:
Handle: RePEc:uam:wpaper:200903

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Web page: http://www.uam.es/departamentos/economicas/analecon/default.html
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Related research
Keywords: environmental policy; technology adoption; monitoring; non-compliance;

Find related papers by JEL classification:
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
Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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  1. Montero, Juan-Pablo, 2002. "Prices versus quantities with incomplete enforcement," Journal of Public Economics, Elsevier, vol. 85(3), pages 435-454, September. [Downloadable!] (restricted)
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This page was last updated on 2009-10-21.

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