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).


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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.

Item Type: Article
Digital Object Identifier (DOI): doi:10.1016/S0928-7655(02)00014-3
ISSNs: 0928-7655 (print)
Keywords: pollution control, asymmetric information, taxes and quotas, stochastic control
ePrint ID: 39691
Date :
Date Event
Date Deposited: 29 Jun 2006
Last Modified: 16 Apr 2017 21:54
Further Information:Google Scholar

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