Voluntary opt-in provision and instrument choice in environmental regulation

Harri Nikula
Additional contact information
Harri Nikula: Faculty of Management and Business, Tampere University

No 2027, Working Papers from Tampere University, Faculty of Management and Business, Economics

Abstract: We study market-based instruments under incomplete participation. Incomplete participation means that the regulation does not cover all emitters that contribute to harmful damages. Our results show that a voluntary opt-in provision should always be incorporated into regulation under incomplete participation as the provision unambiguously increases expected social welfare. Incomplete participation also affects the choice between market-based instruments, tradable permits and environmental taxes, under uncertainty. The impact will depend on whether the voluntary provision is used or not. The voluntary participation does not unambiguously favor one of the instruments, but the advantage is case-specific.

Keywords: Emission taxation; tradable emission permits; uncertainty; voluntary opt-in (search for similar items in EconPapers)
JEL-codes: D62 D81 H23 Q58 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2020-05
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://urn.fi/URN:ISBN:978-952-03-1593-1 First version, 2020 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tam:wpaper:2027

Access Statistics for this paper

More papers in Working Papers from Tampere University, Faculty of Management and Business, Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sami Remes ().