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The monopolistic polluter under environmental liability law: incentives for abatement and R&D

  • Alfred Endres

    ()

  • Tim Friehe

    ()

This article analyzes the output, abatement, and investment decisions made by a monopolistic polluter under environmental liability law. The model applied considers both integrated and end-of-pipe abatement technologies. We find that in the case of fixed technology, in many instances negligence produces more favorable results than strict liability in terms of social welfare. The reason is that output under strict liability is always less than first-best output, whereas output under negligence is not similarly limited. However, this ranking of liability rules may be reversed when technology is endogenous. Under such conditions investment in both integrated and end-of-pipe abatement technologies under negligence is guided by motives foreign to the social planner, whereas the polluter’s calculus under strict liability is similar to that of the social planner. Copyright Springer-Verlag 2013

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File URL: http://hdl.handle.net/10.1007/s00355-011-0640-4
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Article provided by Springer in its journal Social Choice and Welfare.

Volume (Year): 40 (2013)
Issue (Month): 3 (March)
Pages: 753-770

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Handle: RePEc:spr:sochwe:v:40:y:2013:i:3:p:753-770
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  1. María-Eugenia Sanin & Skerdilajda Zanaj, 2011. "A Note on Clean Technology Adoption and its Influence on Tradeable Emission Permits Prices," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 48(4), pages 561-567, April.
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  13. Kurtyka, Oliwia & Mahenc, Philippe, 2011. "The switching effect of environmental taxation within Bertrand differentiated duopoly," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 267-277, September.
  14. SANIN, Maria Eugenia & ZANAJ, Skerdilajda, 2009. "Clean technology adoption and its influence on tradeable emission permit prices," CORE Discussion Papers 2009029, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  25. repec:cup:cbooks:9780521173926 is not listed on IDEAS
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