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An Experimental Analysis of the Effects of Imperfect Compliance on Technology Adoption

Author

Listed:
  • Lidia Vidal-Meliá

    (Universitat Jaume I)

  • Carmen Arguedas

    (Universidad Autónoma de Madrid)

  • Eva Camacho-Cuena

    (Universitat Jaume I)

  • José Luis Zofío

    (Universidad Autónoma de Madrid
    Erasmus University)

Abstract

We present the results of an experimental investigation on incentives to adopt cleaner abatement technologies in the presence of imperfect compliance. We consider two emission control instruments—emission taxes and tradable permits—as well as different combinations of the inspection probability and fine for non-compliance, which can result in full or weak enforcement scenarios. We review and qualify existing theoretical predictions in several ways and find the main result is that allowing for weak enforcement causes tax evasion, reductions in permit prices and lower adoption rates of cleaner abatement technologies. As a result, there are increases in aggregate emissions. Finally, treatments with tradable permits under weak enforcement encounter insufficient trading.

Suggested Citation

  • Lidia Vidal-Meliá & Carmen Arguedas & Eva Camacho-Cuena & José Luis Zofío, 2022. "An Experimental Analysis of the Effects of Imperfect Compliance on Technology Adoption," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 81(3), pages 425-451, March.
    • Handle: RePEc:kap:enreec:v:81:y:2022:i:3:d:10.1007_s10640-021-00634-1
    DOI: 10.1007/s10640-021-00634-1
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    References listed on IDEAS

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    Cited by:

    1. Viktor Koval & Olga Laktionova & Iryna Udovychenko & Piotr Olczak & Svitlana Palii & Liudmyla Prystupa, 2022. "Environmental Taxation Assessment on Clean Technologies Reducing Carbon Emissions Cost-Effectively," Sustainability, MDPI, vol. 14(21), pages 1-19, October.
    2. Timothy N. Cason & John K. Stranlund & Frans P. de Vries, 2022. "Investment Incentives in Tradable Emissions Markets with Price Floors Approach," Purdue University Economics Working Papers 1331, Purdue University, Department of Economics.

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    More about this item

    Keywords

    Abatement Technology; Auction; Environmental policy; Monitoring; Non-compliance; Permit; Taxes;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • 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
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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