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Nonpoint Source Pollution When Polluters Might Cooperate

Listed author(s):
  • Katrin Millock

    ()

    (EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Francois Salanie

    ()

    (LERNA - Economie des Ressources Naturelles - UT1 - Université Toulouse 1 Capitole - INRA - Institut National de la Recherche Agronomique - CEA - Commissariat à l'énergie atomique et aux énergies alternatives)

In a model of nonpoint source pollution, we extend the theory of ambient taxes to the case when polluters might cooperate. We show that regulation through ambient taxes is severely constrained when the degree of cooperation among polluters is unknown to the regulator. On the other hand, if the regulator can invest in costly monitoring of emissions, then the optimal regulation offers a low ambient tax to cooperative groups and an optimal but costly individual emission tax to non-cooperative groups. This mechanism also has attractive properties when risk-aversion is introduced.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00270332.

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Date of creation: 2005
Publication status: Published in The Berkeley Electronic Journal of Economic Analysis and Policy, 2005, 5 (1), pp.article 12
Handle: RePEc:hal:cesptp:hal-00270332
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00270332
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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