Dynamic regulation of nonpoint source pollution when the number of emitters is large

Yacov Tsur and Harry de Gorter ()

No 122124, Discussion Papers from Hebrew University of Jerusalem, Department of Agricultural Economics and Management

Abstract: When a nonpoint source pollution process involves many polluters, each taking his own contribution to aggregate pollution to be negligible, ambient-based policies become ineffective due to lack of strategic interactions between dischargers. We offer a regulation mechanism for this case. The mechanism consists of inter-period and intra-period components. The first exploits ambient (aggregate) information to derive the optimal pollution and aggregate emission processes and the ensuing social price of emission. The intra-period mechanism takes as given the social price of emission and implements the optimal output-abatement-emission allocation across the heterogenous, privately informed firms in each time period. The mechanism gives rise to the full information outcome when the social cost of transfers is nil. A positive social cost of transfers decreases both output and abatement in each time period, though the effect on emission is ambiguous.

Keywords: Crop; Production/Industries (search for similar items in EconPapers)
Pages: 42
Date: 2012
New Economics Papers: this item is included in nep-cta, nep-ene, nep-env and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:ags:huaedp:122124

DOI: 10.22004/ag.econ.122124

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