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Collective and Random Fining versus Tax/Subsidy - Schemes to Regulate Non-Point Pollution: An Experimental Study

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  • Camacho Cuena, Eva
  • Requate, Till

Abstract

In this paper we present results of an experimental study on the performance of three mechanisms which are designed to deal with non-point source pollution : collective fining, random fining, and a tax-subsidy scheme. Our results show that collective and random fining schemes do not induce the subjects to play the efficient equilibrium. Experience from participation in similar treatments further enforces the tendency to under-abate. The taxsubsidy mechanism, by contrast, induces the efficient equilibrium action to be played more frequently than the fining mechanisms, with a slight tendency to over-abate. Experience enforces this tendency. Controlling for the subjects? risk attitude, we find that for risk averse subjects the random fining mechanism outperforms the collective fine.

Suggested Citation

  • Camacho Cuena, Eva & Requate, Till, 2004. "Collective and Random Fining versus Tax/Subsidy - Schemes to Regulate Non-Point Pollution: An Experimental Study," Economics Working Papers 2004-10, Christian-Albrechts-University of Kiel, Department of Economics.
    • Handle: RePEc:zbw:cauewp:2441
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    Cited by:

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    2. Gaston Giordana & Marc Willinger, 2013. "Regulatory instruments for monitoring ambient pollution," Chapters, in: John A. List & Michael K. Price (ed.), Handbook on Experimental Economics and the Environment, chapter 7, pages 193-232, Edward Elgar Publishing.
    3. Sandrine Spaeter & François Cochard & Anne Rozan, 2006. "Prevention and Compensation of Muddy Flows: Some Economic Insights," Working Papers of BETA 2006-29, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    4. Pushkarskaya, Helen N., 2006. "Schemes to Regulate Non-Point Water Pollution: Making Sense of Experimental Results," 2006 Annual meeting, July 23-26, Long Beach, CA 21111, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Reichhuber, Anke & Camacho, Eva & Requate, Till, 2009. "A framed field experiment on collective enforcement mechanisms with Ethiopian farmers," Environment and Development Economics, Cambridge University Press, vol. 14(5), pages 641-663, October.
    6. François Cochard & Julie Le Gallo & Laurent Franckx, 2015. "Regulation Of Pollution In The Laboratory: Random Inspections, Ambient Inspections, And Commitment Problems," Bulletin of Economic Research, Wiley Blackwell, vol. 67(S1), pages 40-73, December.

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