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Prices vs Quantities with Multiple Pollutants

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  • Ambec, Stefan
  • Coria, Jessica

Abstract

We examine the choice of policy instruments (price, quantity or a mix of the two) when two pollutants are regulated and firms' abatement costs are private information. Whether abatement efforts are complements or substitutes is key determining the choice of policies. When pollutants are complements, a mixed policy instrument with a tax on one pollutant and a quota on another is sometimes preferable even if the pollutants are identical in terms of benefits and costs of abatement. Yet, if they are substitutes, the mixed policy is dominated by taxes or quotas.
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Suggested Citation

  • Ambec, Stefan & Coria, Jessica, 2011. "Prices vs Quantities with Multiple Pollutants," LERNA Working Papers 11.17.351, LERNA, University of Toulouse.
  • Handle: RePEc:ler:wpaper:25076
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Elisabetta Cornago & Renaud Foucart, 2014. "Instrument Choice and Cost Uncertainty in the Electricity Market," Working Papers ECARES ECARES 2014-13, ULB -- Universite Libre de Bruxelles.
    2. repec:eee:appene:v:211:y:2018:i:c:p:1021-1029 is not listed on IDEAS
    3. Stranlund, John K. & Son, Insung, 2015. "Prices versus Quantities versus Hybrids in the Presence of Co-pollutants," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205422, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    4. Guy Meunier, 2015. "Prices vs. quantities in presence of a second, unpriced, externality," Working Papers hal-01242040, HAL.
    5. Daiken Mori, 2015. "Determination of efficient environmental policy instruments under uncertainty with the dominant firm model," Economics Bulletin, AccessEcon, vol. 35(4), pages 2637-2644.
    6. Shinkuma, Takayoshi & Sugeta, Hajime, 2016. "Tax versus emissions trading scheme in the long run," Journal of Environmental Economics and Management, Elsevier, vol. 75(C), pages 12-24.
    7. Don Fullerton & Daniel H. Karney, 2014. "Multiple Pollutants, Uncovered Sectors, and Suboptimal Environmental Policies," NBER Working Papers 20334, National Bureau of Economic Research, Inc.
    8. Ambec, Stefan & Coria, Jessica, 2015. "Strategic environmental regulation of multiple pollutants," Working Papers in Economics 626, University of Gothenburg, Department of Economics.
    9. Hélène Ollivier, 2016. "North–South Trade and Heterogeneous Damages from Local and Global Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(2), pages 337-355, October.
    10. Ambec, Stefan & Coria, Jessica, 2018. "Policy spillovers in the regulation of multiple pollutants," Journal of Environmental Economics and Management, Elsevier, vol. 87(C), pages 114-134.
    11. D’Amato, Alessio & Dijkstra, Bouwe R., 2015. "Technology choice and environmental regulation under asymmetric information," Resource and Energy Economics, Elsevier, vol. 41(C), pages 224-247.
    12. repec:adr:anecst:y:2017:i:127:p:163-201 is not listed on IDEAS
    13. Aurélie Slechten & Vincenzo Verardi, 2016. "Measuring the Impact of Multiple Air Pollution Agreements on Global CO2 Emissions," Land Economics, University of Wisconsin Press, vol. 92(3), pages 534-554.
    14. repec:kap:regeco:v:52:y:2017:i:1:d:10.1007_s11149-017-9331-0 is not listed on IDEAS
    15. Bonilla, Jorge & Coria, Jessica & Sterner, Thomas, 2012. "Synergies and Trade-offs between Climate and Local Air Pollution: Policies in Sweden," Working Papers in Economics 529, University of Gothenburg, Department of Economics.
    16. Bernard Caillaud & Gabrielle Demange, 2017. "Joint Design of Emission Tax and Trading Systems," Annals of Economics and Statistics, GENES, issue 127, pages 163-201.
    17. Crago, Christine L. & Stranlund, John K., 2015. "Optimal regulation of carbon and co-pollutants with spatially differentiated damages," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205594, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    18. repec:eee:jeeman:v:87:y:2018:i:c:p:52-71 is not listed on IDEAS
    19. Antoniou, Fabio & Kyriakopoulou, Efthymia, 2015. "On The Strategic Effect of International Permits Trading on Local Pollution: The Case of Multiple Pollutants," Working Papers in Economics 610, University of Gothenburg, Department of Economics.
    20. repec:spr:envpol:v:20:y:2018:i:1:d:10.1007_s10018-017-0187-4 is not listed on IDEAS
    21. repec:kap:regeco:v:51:y:2017:i:3:d:10.1007_s11149-017-9330-1 is not listed on IDEAS

    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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