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Nonpoint source pollution: An experimental investigation of the Average Pigouvian Tax

Author

Listed:
  • Hamet SARR

    () (ENGEES, UMR GESTE, université Strasbourg)

  • Mohamed Ali BCHIR

    () (ENGEES, UMR GESTE, université Strasbourg)

  • François COCHARD

    () (CRESE EA3190 Univ. Bourgogne Franche-Comté)

  • Anne ROZAN

    () (ENGEES, UMR GESTE, université Strasbourg)

Abstract

The “Average Pigouvian Tax” (APT) was proposed by Suter et al. (2008) to reduce the financial burden of the standard ambient tax. This instrument consists in a standard ambient tax divided by the number of firms, which requires polluters to cooperate in order to achieve the social optimum. To enable polluters to cooperate, communication is allowed. We introduce different types of communication: cheap talk, exogenous costly communication (communication is imposed), and endogenous costly communication (conducted on a voluntary basis after a vote). Our experiment confirms that the instrument induces polluters to reduce their emissions under cheap talk. However, we find that group emissions are less reduced when communication is costly. This result still holds even when we endogenize communication by introducing a voting phase.

Suggested Citation

  • Hamet SARR & Mohamed Ali BCHIR & François COCHARD & Anne ROZAN, 2016. "Nonpoint source pollution: An experimental investigation of the Average Pigouvian Tax," Working Papers 2016-05, CRESE.
  • Handle: RePEc:crb:wpaper:2016-05
    as

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    File URL: http://crese.univ-fcomte.fr/WP-2016-05.pdf
    File Function: First version, 2016
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    References listed on IDEAS

    as
    1. Spraggon, John, 2002. "Exogenous targeting instruments as a solution to group moral hazards," Journal of Public Economics, Elsevier, vol. 84(3), pages 427-456, June.
    2. François Cochard & Anne Rozan, 2010. "Taxe ambiante : un outil adapté à la lutte contre les coulées de boue ? Une étude expérimentale," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 91(3), pages 296-326.
    3. Jordan F. Suter & Christian A. Vossler & Gregory L. Poe & Kathleen Segerson, 2008. "Experiments on Damage-Based Ambient Taxes for Nonpoint Source Polluters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(1), pages 86-102.
    4. Gregory L. Poe & William D. Schulze & Kathleen Segerson & Jordan F. Suter & Christian A. Vossler, 2004. "Exploring the Performance of Ambient-Based Policy Instruments When Nonpoint Source Polluters Can Cooperate," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1203-1210.
    5. James Shortle & David Abler & Richard Horan, 1998. "Research Issues in Nonpoint Pollution Control," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 11(3), pages 571-585, April.
    6. 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.
    7. Bochet, Olivier & Page, Talbot & Putterman, Louis, 2006. "Communication and punishment in voluntary contribution experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 60(1), pages 11-26, May.
    8. Suter, Jordan F. & Vossler, Christian A. & Poe, Gregory L. & Segerson, Kathleen, 2008. "AJAE Appendix: Experiments on Damage-Based Ambient Taxes for Nonpoint Source Polluters," American Journal of Agricultural Economics Appendices, Agricultural and Applied Economics Association, vol. 90(1), February.
    9. Segerson, Kathleen, 1988. "Uncertainty and incentives for nonpoint pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 87-98, March.
    10. Putterman, Louis & Tyran, Jean-Robert & Kamei, Kenju, 2011. "Public goods and voting on formal sanction schemes," Journal of Public Economics, Elsevier, vol. 95(9), pages 1213-1222.
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    22. repec:cup:apsrev:v:86:y:1992:i:02:p:404-417_08 is not listed on IDEAS
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    More about this item

    Keywords

    nonpoint source pollution; ambient tax; social dilemma; cooperation; cheap talk; costly communication; vote.;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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