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Nonpoint Source Pollution Taxes and Excessive Tax Burden

  • Karp, Larry

If a regulator is unable to measure firms’ individual emissions, an ambient tax can be used to achieve the socially desired level of pollution. With this tax, each firm pays a unit tax on aggregate emissions. In order for the tax to be effective,firms must recognize that their decisions affect aggregate emissions. When firms behave strategically with respect to the tax-setting regulator, under plausible circumstances their tax burden is lower under an ambient tax, relative to the tax which charges firms on the basis of individual emissions. Firms may prefer the case where the regulator is unable to observe individual firm emissions, even if this asymmetric information causes the regulator to tax each …rm on the basis of aggregate emissions.

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Paper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt4z62b52k.

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Date of creation: 01 Mar 1998
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Handle: RePEc:cdl:agrebk:qt4z62b52k
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  1. Xepapadeas, A. P., 1991. "Environmental policy under imperfect information: Incentives and moral hazard," Journal of Environmental Economics and Management, Elsevier, vol. 20(2), pages 113-126, March.
  2. Herriges Joseph A. & Govindasamy Ramu & Shogren Jason F., 1994. "Budget-Balancing Incentive Mechanisms," Journal of Environmental Economics and Management, Elsevier, vol. 27(3), pages 275-285, November.
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  4. Xepapadeas, A. P., 1992. "Environmental policy design and dynamic nonpoint-source pollution," Journal of Environmental Economics and Management, Elsevier, vol. 23(1), pages 22-39, July.
  5. Hyde, Charles E & Rausser, Gordon C & Simon, Leo K, 2000. "Regulating Multiple Polluters: Deterrence and Liability Allocation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(2), pages 495-521, May.
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  7. Livernois, J. & Karp, L., 1992. "Using Automatic Tax Changes to Control Pollution Emissions," Working Papers 1992-12, University of Guelph, Department of Economics and Finance.
  8. Tsutsui, Shunichi & Mino, Kazuo, 1990. "Nonlinear strategies in dynamic duopolistic competition with sticky prices," Journal of Economic Theory, Elsevier, vol. 52(1), pages 136-161, October.
  9. Cabe, Richard & Herriges, Joseph A., 1992. "The Regulation of Non-Point Sources of Pollution Under Imperfect and Asymmetric Information," Staff General Research Papers 10787, Iowa State University, Department of Economics.
  10. Karp, Larry S., 1992. "The endogenous stability of economic systems: The case of many agents," Journal of Economic Dynamics and Control, Elsevier, vol. 16(1), pages 117-138, January.
  11. Y.H. Farzin & J.D. Kaplan, 1999. "Nonpoint Source Pollution Control Under Incomplete and Costly Information," Working Papers 1999.32, Fondazione Eni Enrico Mattei.
  12. Lars Hansen, 1998. "A Damage Based Tax Mechanism for Regulation of Non-Point Emissions," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 12(1), pages 99-112, July.
  13. James Shortle & David Abler & Richard Horan, 1998. "Research Issues in Nonpoint Pollution Control," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 11(3), pages 571-585, April.
  14. Segerson, Kathleen, 1988. "Uncertainty and incentives for nonpoint pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 87-98, March.
  15. Millock Katrin & Salanié François, 2005. "Nonpoint Source Pollution When Polluters Might Cooperate," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-27, July.
  16. Richard Horan & James Shortle & David Abler, 2002. "Ambient Taxes Under m-Dimensional Choice Sets, Heterogeneous Expectations, and Risk-Aversion," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 21(2), pages 189-202, February.
  17. Millock, Katrin & Sunding, David & Zilberman, David, 2002. "Regulating Pollution with Endogenous Monitoring," Journal of Environmental Economics and Management, Elsevier, vol. 44(2), pages 221-241, September.
  18. Horan, Richard D. & Shortle, James S. & Abler, David G., 1998. "Ambient Taxes When Polluters Have Multiple Choices," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 186-199, September.
  19. Cabe, Richard & Herriges, Joseph A., 1992. "The regulation of non-point-source pollution under imperfect and asymmetric information," Journal of Environmental Economics and Management, Elsevier, vol. 22(2), pages 134-146, March.
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