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Designing Regulatory Policies for Complex Externalities: The Case of Agricultural Pollution

Athanasios Kampas (), Katerina Melfou () and Ashar Aftab
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Katerina Melfou: Department of Agricultural Products Marketing and Quality Control, Technological Institute of Western Macedonia, 53100 Florina, Greece

No 2012-6, Working Papers from Agricultural University of Athens, Department Of Agricultural Economics

Abstract: The paper examines the issue of designing and implementing policy measures to control complex agricultural externalities. Complex externalities refer to the situation where a production (firm on firm) externality coexists with a detrimental (firm on society) externality. The paper identifies the optimal solution for complex externalities, which is a combination of spatially differentiated taxes. However, severe information requirements render the first-best policy infeasible. Finally, a likely voluntary scheme based on firm self-report is examined which may enforce firm compliance with the optimal policy.

Keywords: complex externalities; state dependent linear ambient tax; voluntary schemes; moral hazard; incentive compatibility; spatial externalities (search for similar items in EconPapers)
JEL-codes: H23 Q19 Q28 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2012
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Journal Article: Designing Regulatory Policies for Complex Externalities: The Case of Agricultural Pollution (2013) Downloads
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