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Who Should Bear the Administrative Costs of an Emissions Tax?

Author

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  • John K. Stranlund

    (Department of Resource Economics, University of Massachusetts Amherst)

  • Carlos A. Chavez

    (Departmento de Economics, Universidad de Concepcion Chile)

Abstract

All environmental policies involve administrative costs, the costs of implementing and managing policies that extend beyond abatement costs. We examine theoretically the optimal distribution of these costs between the public and regulated sources of pollution. The distribution of administrative costs affects social welfare only if public funds are more expensive than private funds, or if the distribution of administrative costs affects the size of a regulated industry. If having the public take on a larger part of administrative costs increases the size of the industry and this does not lead to lower emissions for a given emissions tax, then it is optimal to make the pollution sources bear all of the administrative costs. A necessary, but not sufficient, reason for having the public bear part of the cost burden is if aggregate emissions decrease as a result.

Suggested Citation

  • John K. Stranlund & Carlos A. Chavez, 2011. "Who Should Bear the Administrative Costs of an Emissions Tax?," Working Papers 2011-3, University of Massachusetts Amherst, Department of Resource Economics.
  • Handle: RePEc:dre:wpaper:2011-3
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    3. Lenka Hyklová, 2017. "Administrative Costs of Environmental Taxes in the Czech Republic," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2017(4), pages 19-29.

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    More about this item

    Keywords

    Emissions Taxes; Pigouvian Taxes; Administrative Costs; Pollution Control;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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