Second Best Environmental Policies under Uncertainty

Fabio Antoniou, Panos Hatzipanayotou and Phoebe Koundouri ()

No 49.2010, Environmental Economy and Policy Research Working Papers from University of Cambridge, Department of Land Economics

Abstract: We construct a strategic trade model of an international duopoly, whereby production by exporting firms generates a local pollutant. Governments use environmental policies, i.e., an emissions standard or a tax, to control pollution and for rent shifting purposes. Contrary to their firm, however, governments are unable to perfectly foresee the actual level of demand, the cost of abatement and the damage caused from pollution. Under these modes of uncertainty we derive sufficient conditions under which the governments optimally choose an emissions tax over an emissions standard.

Keywords: Strategic Environmental Policy; Pollution; Choice of Policy Instrument; Uncertainty. (search for similar items in EconPapers)
JEL-codes: F12 F18 Q58 (search for similar items in EconPapers)
Date: 2010, Revised 2010
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Second Best Environmental Policies under Uncertainty (2012)
Working Paper: Second Best Environmental Policies under Uncertainty (2010)
Working Paper: Second Best Environemntal Policies Under Uncertainty (2010)
Working Paper: Second Best Environmental Policies under Uncertainty (2010)
Working Paper: Second Best Environmental Policies under Uncertainty (2009)
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