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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), pp. 367-384. (doi:10.1016/S0928-7655(02)00014-3).

Record type: Article


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.

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Published date: 2002
Keywords: pollution control, asymmetric information, taxes and quotas, stochastic control


Local EPrints ID: 39691
ISSN: 0928-7655
PURE UUID: 8c28c5b4-9d2a-4ef9-af6b-1056c081146e

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Date deposited: 29 Jun 2006
Last modified: 17 Jul 2017 15:36

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Author: Michael Hoel
Author: Larry Karp

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