Regulation via the Polluter-Pays Principle

Stefan Ambec and Lars Ehlers

Cahiers de recherche from Universite de Montreal, Departement de sciences economiques

Abstract: We consider the problem of regulating an economy with environmental pollution. We examine the distributional impact of the polluter-pays principle which requires that any agent compensates all other agents for the damages caused by his or her (pollution) emissions. With constant marginal damages we show that regulation via the polluter-pays principle leads to the unique welfare distribution that assigns non-negative individual welfare and renders each agent responsible for his or her pollution impact. We extend both the polluter-pays principle and this result to increasing marginal damages due to pollution. We also discuss the acceptability of the polluter-pays principle and compare it with the Vickrey-Clark-Groves mechanism.

Keywords: Regulation; Polluter-Pays Principle; Responsibility for Pollution Impact; Externalities. (search for similar items in EconPapers)
JEL-codes: C7 D02 D30 D6 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2011
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Downloads: (external link)
https://papyrus.bib.umontreal.ca/xmlui/handle/1866/4827 (application/pdf)

Related works:
Journal Article: Regulation via the Polluter‐pays Principle (2016)
Working Paper: Regulation via the Polluter-Pays Principle (2011)
Working Paper: Regulation via the Polluter-Pays Principle (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:mtl:montde:2011-01

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