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Regulating altruistic agents

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  • Anthony Heyes
  • Sandeep Kapur

Abstract

Altruism or `regard for others' can encourage self-restraint among generators of negative externalities, thereby mitigating the externality problem. We explore how introducing impure altruism into standard regulatory settings alters regulatory prescriptions. The optimal calibration of both quantitative controls and externality taxes is affected. It also leads to surprising results on the comparative performance of instruments. Under quantity-based regulation, welfare is increasing in the propensity for altruism in the population; under price-based regulation, the relationship is non-monotonic. Price-based regulation is preferred when the population is either predominantly altruistic or predominantly selfish; quantity-based regulation is preferred for cases in between.

Suggested Citation

  • Anthony Heyes & Sandeep Kapur, 2011. "Regulating altruistic agents," Canadian Journal of Economics, Canadian Economics Association, vol. 44(1), pages 227-246, February.
  • Handle: RePEc:cje:issued:v:44:y:2011:i:1:p:227-246
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    Cited by:

    1. Timo Goeschl & Grischa Perino, 2012. "Instrument Choice and Motivation: Evidence from a Climate Change Experiment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 52(2), pages 195-212, June.
    2. Grischa Perino, 2013. "Private provision of public goods in a second-best world: Cap-and-trade schemes limit green consumerism," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 13-01, School of Economics, University of East Anglia, Norwich, UK..
    3. repec:kap:regeco:v:52:y:2017:i:1:d:10.1007_s11149-017-9331-0 is not listed on IDEAS
    4. Grischa Perino & Luca A. Panzone & Timothy Swanson, 2014. "Motivation Crowding In Real Consumption Decisions: Who Is Messing With My Groceries?," Economic Inquiry, Western Economic Association International, vol. 52(2), pages 592-607, April.
    5. Joachim Fuenfgelt & Stefan Baumgaertner, 2012. "Regulation of morally responsible agents with motivation crowding," Working Paper Series in Economics 241, University of Lüneburg, Institute of Economics.
    6. Grischa Perino, 2015. "Climate Campaigns, Cap and Trade, and Carbon Leakage: Why Trying to Reduce Your Carbon Footprint Can Harm the Climate," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(3), pages 469-495.
    7. Joachim Fuenfgelt & Stefan Baumgaertner, 2012. "A utilitarian notion of responsibility for sustainability," Working Paper Series in Economics 234, University of Lüneburg, Institute of Economics.

    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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