Prices vs Quantities with Multiple Pollutants

Stefan Ambec and Jessica Coria

No 517, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: We examine the choice of policy instrument price, quantity, or a mix of the two when two pollutants are regulated and firms’ abatement costs are private information. A key parameter that affects this choice is the technological externality between the abatement efforts involved, i.e., whether they are substitutes or complements. If they are complements, a mix policy instrument with a tax on one pollutant and a quota on the other is sometime preferable, even if the pollutants are identical in terms of benefits and costs of abatement. Yet, if they are substitutes, the mix policy is dominated by taxes or quotas.

Keywords: pollution; environmental regulation; policy mixes; tax; emission standard; asymmetric information (search for similar items in EconPapers)
JEL-codes: D62 Q50 Q53 Q58 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2011-09-27
New Economics Papers: this item is included in nep-cta, nep-cwa, nep-ene, nep-env and nep-reg
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Prices vs quantities with multiple pollutants (2013)
Working Paper: Prices vs Quantities with Multiple Pollutants (2011)
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