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Efficient Environmental Policy with Imperfect Compliance

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  • Agnar Sandmo

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Abstract

Discussions of efficient environmental policytend to recommend taxes rather than quotas ongrounds of efficiency; a uniform tax willequalize marginal abatement cost betweenpolluters. When polluters' actions are imperfectly observable, the distinction betweentaxes and quotas becomes less clear. Taxes maybe evaded by underreporting of emissions, whilequota violations will not always be discovered.This paper explores the conditions under whichthe efficiency properties of taxes continue tohold even when evasion is possible, and theextent to which the fine for quota violationsplays the same role as a tax on emissions withsimilar efficiency properties. Copyright Kluwer Academic Publishers 2002

Suggested Citation

  • Agnar Sandmo, 2002. "Efficient Environmental Policy with Imperfect Compliance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 23(1), pages 85-103, September.
  • Handle: RePEc:kap:enreec:v:23:y:2002:i:1:p:85-103
    DOI: 10.1023/A:1020236324130
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    References listed on IDEAS

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    Keywords

    compliance; efficiency; pollution; quotas; taxes;

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