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Pigouvian tax, abatement policies and uncertainty on the environment

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  • Donatella Baiardi
  • Mario Menegatti

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Abstract

The paper examines the effects of environmental uncertainty on Pigouvian tax and abatement policy used, either separately or contemporaneously, to counteract pollution. We discuss uncertainty in three aspects: environmental quality, pollution effect and the impact of abatement. For each case we determine the conditions ensuring that uncertainty increases the size of public intervention and provide an economic interpretation and some parallelisms with other risk problems. The last part of the paper generalizes some of our results to the case of N-th order risk changes.
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Suggested Citation

  • Donatella Baiardi & Mario Menegatti, 2011. "Pigouvian tax, abatement policies and uncertainty on the environment," Journal of Economics, Springer, vol. 103(3), pages 221-251, July.
  • Handle: RePEc:kap:jeczfn:v:103:y:2011:i:3:p:221-251 DOI: 10.1007/s00712-011-0199-7
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    Citations

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    Cited by:

    1. Elyès Jouini & Clotilde Napp & Diego Nocetti, 2013. "Economic consequences of Nth-degree risk increases and Nth-degree risk attitudes," Journal of Risk and Uncertainty, Springer, vol. 47(2), pages 199-224, October.
    2. repec:dau:papers:123456789/12392 is not listed on IDEAS
    3. Donatella Baiardi & Matteo Manera & Mario Menegatti, 2014. "The Effects of Environmental Risk on Consumption: an Empirical Analysis on the Mediterranean Countries," Working Papers 271, University of Milano-Bicocca, Department of Economics, revised Apr 2014.
    4. repec:gam:jsusta:v:9:y:2017:i:11:p:2046-:d:118042 is not listed on IDEAS
    5. repec:dau:papers:123456789/11094 is not listed on IDEAS
    6. Donatella Baiardi & Marco Magnani & Mario Menegatti, 2014. "Precautionary saving under many risks," Journal of Economics, Springer, vol. 113(3), pages 211-228, November.
    7. Menegatti, Mario, 2015. "New results on high-order risk changes," European Journal of Operational Research, Elsevier, vol. 243(2), pages 678-681.
    8. Baiardi, Donatella & Manera, Matteo & Menegatti, Mario, 2013. "Consumption and precautionary saving: An empirical analysis under both financial and environmental risks," Economic Modelling, Elsevier, pages 157-166.
    9. Menegatti, Mario, 2014. "New results on the relationship among risk aversion, prudence and temperance," European Journal of Operational Research, Elsevier, vol. 232(3), pages 613-617.
    10. Arvaniti, Maria, 2016. "Uncertainty, Extreme Outcomes and Climate Change: a critique," CERE Working Papers 2016:11, CERE - the Center for Environmental and Resource Economics.
    11. Jianli Wang & Pu Gong, 2013. "Labor supply with stochastic wage rate and non-labor income uncertainty," Journal of Economics, Springer, pages 41-55.

    More about this item

    Keywords

    Pigouvian tax; Abatement policies; Environment; Uncertainty; Bivariate utility; H23; D81; Q5;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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