Second Best Environmental Policies under Uncertainty
Governments use environmental policies, such as an emissions standard or a tax, to control pollution and for rent shifting purposes. Contrary to firms, however, governments are unable to perfectly foresee the actual level of demand and the cost of abatement. Our results suggest that not only the presence but also the absolute level of uncertainty matters for the optimal choice of the environmental policy instrument. Moreover, the optimality conditions under strategic behavior may lead to welfare losses relative to the cooperative outcomes because of under-regulation and lack of policy coordination between the two countries.
Volume (Year): 78 (2012)
Issue (Month): 3 (January)
|Contact details of provider:|| Web page: http://www.southerneconomic.org/|
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:sej:ancoec:v:78:3:y:2012:p:10191-1040. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Laura Razzolini)
If references are entirely missing, you can add them using this form.