Taxes versus quotas for a stock pollutant
Hoel, Michael and Karp, Larry (2002) Taxes versus quotas for a stock pollutant. Resource and Energy Economics, 24, (4), 367-384. (doi:10.1016/S0928-7655(02)00014-3).
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We compare the effects of taxes and quotas for an environmental problem where the regulator and polluter have asymmetric information about abatement costs, and environmental damage depends on pollution stock. An increase in the slope of the marginal abatement cost curve, or a decrease in the slope of the marginal damage curve, favors taxes.
An increase in the discount rate or the stock decay rate favors tax usage. Taxes dominate quotas if the length of a period during which decisions are constant is sufficiently small. An empirical illustration suggests that taxes dominate quotas for the control of greenhouse gasses.
|Keywords:||pollution control, asymmetric information, taxes and quotas, stochastic control|
|Subjects:||H Social Sciences > H Social Sciences (General)|
|Divisions:||University Structure - Pre August 2011 > School of Social Sciences > Economics
|Date Deposited:||29 Jun 2006|
|Last Modified:||06 Aug 2015 02:34|
|RDF:||RDF+N-Triples, RDF+N3, RDF+XML, Browse.|
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