The Choice of Policy Instruments to Control Pollution Under Costly Enforcement and Incomplete Information

Carlos Chavez, Mauricio Villena and John Stranlund ()

Journal of Applied Economics, 2009, vol. 12, issue 2, 207-227

Abstract: We analyze the cost of enforcing a system of firm specific emissions standards vis a vis a transferable emissions permit system in the context of complete and incomplete information. We also examine the optimality of a transferable emissions permit system when abatement costs and enforcement costs are considered. We show that under incomplete information, regulation based on each firm-specific emissions standards cannot be less costly than a transferable emissions permit system. In addition, we find that the distribution of emissions that minimize aggregate program costs differ from the distribution of emissions generated by a competitive transferable emissions permit system.

Date: 2009
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Journal Article: The choice of policy instruments to control pollution under costly enforcement and incomplete information (2009)
Working Paper: The Choice of Policy Instruments to Control Pollution under Costly Enforcement and Incomplete Information (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:taf:recsxx:v:12:y:2009:i:2:p:207-227

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DOI: 10.1016/S1514-0326(09)60013-1

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