An Experimental Analysis of the Effects of Imperfect Compliance on Technology Adoption

Lidia Vidal-Meliá, Carmen Arguedas, Eva Camacho-Cuena () and José Zofío
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Lidia Vidal-Meliá: Universitat Jaume I
Eva Camacho-Cuena: Universitat Jaume I
Authors registered in the RePEc Author Service: Lidia Vidal Meliá

Environmental & Resource Economics, 2022, vol. 81, issue 3, No 2, 425-451

Abstract: Abstract We present the results of an experimental investigation on incentives to adopt cleaner abatement technologies in the presence of imperfect compliance. We consider two emission control instruments—emission taxes and tradable permits—as well as different combinations of the inspection probability and fine for non-compliance, which can result in full or weak enforcement scenarios. We review and qualify existing theoretical predictions in several ways and find the main result is that allowing for weak enforcement causes tax evasion, reductions in permit prices and lower adoption rates of cleaner abatement technologies. As a result, there are increases in aggregate emissions. Finally, treatments with tradable permits under weak enforcement encounter insufficient trading.

Keywords: Abatement Technology; Auction; Environmental policy; Monitoring; Non-compliance; Permit; Taxes (search for similar items in EconPapers)
JEL-codes: C92 K42 L51 Q28 Q55 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10640-021-00634-1

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