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Pigouvian Tax, Abatement Policies and Uncertainty on the Environment

  • M. Menegatti

    ()

  • D. Baiardi

    ()

The paper examines the effects of environmental uncertainty on Pigouvian tax and abatement policy used, either separately or contemporaneously, to counteract pollution. We discuss uncertainty in three aspects: environmental quality, pollution effect and the impact of abatement. For each case we determine the conditions ensuring that uncertainty increases the size of public intervention and provide an economic interpretation and some parallelisms with other risk problems. The last part of the paper generalizes some of our results to the case of N-th order risk changes.

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File URL: http://swrwebeco.econ.unipr.it/RePEc/pdf/I_2010-04.pdf
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Paper provided by Department of Economics, Parma University (Italy) in its series Economics Department Working Papers with number 2010-EP04.

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Length: 19 pages
Date of creation: 2010
Handle: RePEc:par:dipeco:2010-ep04
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