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Is the “average Pigouvian tax” robust to the size of the group of polluters?

Hamet Sarr, Mohamed Ali Bchir, François Cochard and Anne Rozan ()
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Hamet Sarr: ENGEES, GESTE UMR MA 8101
Mohamed Ali Bchir: ENGEES, GESTE UMR MA 8101
François Cochard: CRESE, Université de Franche-Comté
Anne Rozan: ENGEES, GESTE UMR MA 8101

Review of Agricultural, Food and Environmental Studies, 2021, vol. 102, issue 3, No 2, 285-295

Abstract: Abstract We study the “average Pigouvian tax” (APT), an ambient-based policy instrument that requires polluters to cooperate to achieve the social optimum. In this paper, we are interested in the group size variation and its effect of the APT efficiency. Indeed, in the field, the implementation of the instrument will face group sizes that can vary from a few to a large number of farmers. We find that increasing the size of the group reduces cooperation among subjects, thereby reducing the efficiency of the instrument. We also show that when the sucker’s cost is lowered, the instrument can converge towards the social optimum.

Keywords: Nonpoint source pollution; Ambient-based taxes; Cooperation; Size effect; sucker’s payoff; C92; H23; Q53 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s41130-021-00145-z

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