Design standards and technology adoption: Welfare effects of increasing environmental fines when the number of firms is endogenous
AbstractThis paper examines the consequences of an increase in the expected fine for non-compliance with an environmental design standard for an industry with Cournot competition and free entry. Our analysis is quite timely, given recent policy proposals to raise environmental fines. We describe the range in which changes in the environmental fine have no consequences, and detail the various other effects that emerge. It is established that an increase in the expected fine for non-compliance may have adverse welfare consequences, while it always serves the purpose of inducing a greater share of firms to adopt the prescribed technology. --
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Bibliographic InfoPaper provided by Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE) in its series DICE Discussion Papers with number 106.
Date of creation: 2013
Date of revision:
pollution; regulation; design standard; endogenous number of firms; environmental fines; SEC;
Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-09-24 (All new papers)
- NEP-ENV-2013-09-24 (Environmental Economics)
- NEP-LAW-2013-09-24 (Law & Economics)
- NEP-RES-2013-09-24 (Resource Economics)
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