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An Experimental Test of Ambient-Based Mechanisms for Nonpoint Source Pollution Control

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  • Vossler, Christian A.
  • Poe, Gregory L.
  • Schulze, William D.
  • Segerson, Kathleen

Abstract

This paper presents an experimental investigation of the three ambient-based mechanisms proposed by Segerson [J. Environ. Econom. Management 15, 87-98 (1988)] for controlling emissions from a group of nonpoint source polluters: a marginal tax/subsidy, a fixed penalty, and a mechanism that combines the two. To parallel likely conditions in a small watershed, in half of the experiment sessions we allow the group of polluters to engage in costless, non-binding discussion (cheap talk). In sessions without discussion, we find that the tax/subsidy instrument achieves the pollution target, while the fixed penalty and combined mechanisms do not. However, the tax/subsidy does not induce compliance at the individual level. Allowing discussion renders the tax/subsidy ineffective by encouraging gross overcompliance, but notably increases the usefulness of the fixed penalty and combined mechanisms. Differences in outcomes are likely attributable to the dissimilar marginal incentives under the three mechanisms.

Suggested Citation

  • Vossler, Christian A. & Poe, Gregory L. & Schulze, William D. & Segerson, Kathleen, 2002. "An Experimental Test of Ambient-Based Mechanisms for Nonpoint Source Pollution Control," Working Papers 127334, Cornell University, Department of Applied Economics and Management.
  • Handle: RePEc:ags:cudawp:127334
    DOI: 10.22004/ag.econ.127334
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    File URL: https://ageconsearch.umn.edu/record/127334/files/Cornell_Dyson_wp0235.pdf
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    References listed on IDEAS

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    Cited by:

    1. Pushkarskaya, Helen N., 2006. "Schemes to Regulate Non-Point Water Pollution: Making Sense of Experimental Results," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25507, International Association of Agricultural Economists.
    2. François Cochard & Marc Willinger & Anastasios Xepapadeas, 2005. "Efficiency of Nonpoint Source Pollution Instruments: An Experimental Study," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(4), pages 393-422, April.
    3. Camacho Cuena, Eva & Requate, Till, 2004. "Collective and Random Fining versus Tax/Subsidy - Schemes to Regulate Non-Point Pollution: An Experimental Study," Economics Working Papers 2004-10, Christian-Albrechts-University of Kiel, Department of Economics.
    4. Francois Cochard & Anthony Ziegelmeyer & Kene Boun My, 2004. "Regulation of Nonpoint Emissions under Limited Information: A Stress Experimental Test of the Ambient Tax Mechanism," Papers on Strategic Interaction 2003-33, Max Planck Institute of Economics, Strategic Interaction Group.

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    Environmental Economics and Policy;

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