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Designing Regulatory Policies for Complex Externalities: The Case of Agricultural Pollution

Author

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  • Athanasios Kampas

    () (Department of Agricultural Economics & Development, Agricultural University of Athens, Iera Odos 75, 11855 Athens, Greece)

  • Katerina Melfou

    () (Department of Agricultural Products Marketing and Quality Control, Technological Institute of Western Macedonia, 53100 Florina, Greece)

  • Ashar Aftab

    () (Durham Business School, University of Durham, Mill Hill Lane, Durham City, United Kingdom DH1 3LB)

Abstract

The paper examines the issue of designing and implementing policy measures to control complex agricultural externalities. Complex externalities refer to the situation where a production (firm on firm) externality coexists with a detrimental (firm on society) externality. The paper identifies the optimal solution for complex externalities, which is a combination of spatially differentiated taxes. However, severe information requirements render the first-best policy infeasible. Finally, a likely voluntary scheme based on firm self-report is examined which may enforce firm compliance with the optimal policy.

Suggested Citation

  • Athanasios Kampas & Katerina Melfou & Ashar Aftab, 2012. "Designing Regulatory Policies for Complex Externalities: The Case of Agricultural Pollution," Working Papers 2012-6, Agricultural University of Athens, Department Of Agricultural Economics.
    • Handle: RePEc:aua:wpaper:2012-6
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    complex externalities; state dependent linear ambient tax; voluntary schemes; moral hazard; incentive compatibility; spatial externalities;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q19 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Other
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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