Policy spillovers in the regulation of multiple pollutants

Stefan Ambec and Jessica Coria

No 15-602, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We analyze the interplay between policies aimed to control transboundary and local pollu- tants such as greenhouse gases and particulate matter. The two types of pollution interact in the abatement cost function of the polluting firms through economies or diseconomies of scope. They are regulated by distinct entities, potentially with different instruments that are designed according to some specific agenda. We show that the choice of regulatory instrument and the timing of the regulations matter for efficiency. Emissions of the local pollutant are distorted if the regulators anticipate that transboundary pollution will later be regulated through emission caps. The regulation is too stringent with diseconomies of scope, and not enough with economies of scope. In contrast, we obtain efficiency if the transboundary pollutant is regulated by tax provided that the revenues from taxing emissions are redistributed to the local communities in a lump-sum way.

Keywords: environmental regulation; transboundary pollution; multiple-pollutants; policy spillovers; emission tax; emission standard; emissions trading (search for similar items in EconPapers)
JEL-codes: D62 H23 Q50 Q53 Q54 Q58 (search for similar items in EconPapers)
Date: 2015-09, Revised 2017-01
New Economics Papers: this item is included in nep-ene, nep-env, nep-reg and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: Policy spillovers in the regulation of multiple pollutants (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:29798

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