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| Hoel, Michael; Karp, Larry S.. |
| We compare the effects of taxes and quotas for an environmental problem in which the regulator and polluter have asymmetric information about abatement costs, and the environmental damage depends on the stock of pollution. We thus extend, to a dynamic framework, previous studies in which environmental damages depend on the flow of pollution. As with the static analysis, an increase in the slope of the marginal abatement cost curve, or a decrease in the slope of the marginal damage curve, favors taxes. In addition, in the dynamic model, an increase in the discount rate or the stock decay rate favor the use of taxes. Taxes certainly dominate quotas if the length of a period during which decisions are constant is sufficiently small. An empirical illustration... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Pollution control; Asymmetric information; Taxes and quotas; Stochastic control; Environmental Economics and Policy; H21; Q28. |
| Ano: 2001 |
URL: http://purl.umn.edu/25010 |
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| Golombek, Rolf; Hoel, Michael. |
| We study an international climate agreement that assigns emission quotas to each participating country. Unlike the simplest models in the literature, we assume that abatement costs are affected by R&D activities undertaken in all firms in all countries, i.e. abatement technologies are endogenous. In line with the Kyoto agreement we assume that the international climate agreement does not include R&D policies. We show that for a second-best agreement, marginal costs of abatement should exceed the Pigovian level. Moreover, marginal costs of abatement differ across countries in the second-best quota agreement with heterogeneous countries. In other words, the second-best outcome cannot be achieved if emission quotas are tradable. |
| Tipo: Working or Discussion Paper |
Palavras-chave: Environmental Economics and Policy. |
| Ano: 2006 |
URL: http://purl.umn.edu/12042 |
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