Weitzman revisited: Emission standards vs. taxes with uncertain control costs and market power of polluting firms

Clemens Heuson

No 299, Discussion Paper Series from Universitaet Augsburg, Institute for Economics

Abstract: It is well known that uncertainty concerning firms’ costs as well as market power of the latter have to be taken into account in order to design and choose environmental policy instruments in an optimal way. As a matter of fact, in most actual regulation settings the policy maker has to face both of these complications simultaneously. However, hitherto environmental economic theory has restricted to either of them when submitting conventional policy instruments to a comparative analysis. The article at hand takes a first step in closing this gap. It investigates the welfare effects of emission standards and taxes against the background of uncertain emission control costs and various degrees of the polluting firms’ market power.

Keywords: Cournot oligopoly; external diseconomies of pollution; cost uncertainty; emission standard; emission tax (search for similar items in EconPapers)
JEL-codes: D62 D89 L13 Q58 (search for similar items in EconPapers)
Date: 2008-03
New Economics Papers: this item is included in nep-com, nep-ene, nep-env, nep-mic and nep-res
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Citations: View citations in EconPapers (2)

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Working Paper: Weitzman revisited: Emission standards vs. taxes with uncertain control costs and market power of polluting firms (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:aug:augsbe:0299

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