On the Dynamics of the Regulation of Pollution: Incentive Compatible Regulation of a Persistent Pollutant

Benford, Frank

doi:10.1006/jeem.1998.1036

Cited by 23 publications

(25 citation statements)

References 37 publications

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“…where 4 We vary the parameters d; y; v; and e (the total unregulated emissions, where e j ¼ e Àj ¼ e=2) in order to explore their effects on the regulator's policies, optimal firm response, and overall welfare of using either a tax or a tradeable permit system. In the permits case, we explore two regimes: (1) For both the taxes and permits cases, we compute the dynamic programming equation and associated policy function in each period over a 20-year horizon by iterating backwards on the value function.…”

Section: Optimization Methodsmentioning

confidence: 99%

“…Baldursson and von der Fehr [3] found that, in a dynamic and uncertain model, any irreversibility in abatement decisions can affect policy choice generally as well as the price-quantity comparison. 2 In a paper that extends Kwerel's model to a dynamic setting, Benford [4] showed that when firms are perfectly competitive (that is, non-strategic), the natural extension of Kwerel's scheme can induce the optimal trajectory of abatement over time.…”

Section: Introductionmentioning

confidence: 99%

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Dynamic environmental policy with strategic firms: prices versus quantities

Moledina

Coggins

Polasky

et al. 2003

Journal of Environmental Economics and Management

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Section: Optimization Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Dynamic environmental policy with strategic firms: prices versus quantities

Moledina

Coggins

Polasky

et al. 2003

Journal of Environmental Economics and Management

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“…7 To be more precise, in the …rst policy game, which will be labeled as the committed (or ex-ante) regulator game, the regulator sets the level of an emission tax, then the monopolist, taking that level as given, chooses the level of abatement and …nally the output. In the second policy game, the non-committed (or ex-post) regulator game, the monopolist and the …rm simultaneously 5 It could be seen as well as an extension of the linear-quadratic case analyzed by Benchekroun and Long (1998) to include abatement activities.…”

Section: The Modelmentioning

confidence: 99%

“…6 Yanase (2009) uses a similar model to study the strategic e¤ects of environmental policy in a model of international pollution control in which two polluting …rms located in two di¤erent countries compete in a third country market. 7 Notice that in our model time is a continuous variable.…”

Section: The Modelmentioning

confidence: 99%

The Strategic Use of Abatement by a Polluting Monopoly

Martín‐Herrán

Rubio

2016

SSRN Journal

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This paper evaluates the e¤ects of the lack of regulatory commitment on emission tax applied by the regulator, abatement e¤ort made by the monopoly and social welfare comparing two alternative policy games. The …rst game assumes that the regulator commits to an ex-ante level of the emission tax. In the second one, in a …rst stage the regulator and the monopolist simultaneously choose the emission tax and abatement respectively, and in a second stage the monopolist selects the output level. We …nd that the lack of commitment leads to lower taxation and abatement that yield larger emissions and, consequently, a larger steady-state pollution stock. Moreover, the increase of environmental damages because of the increase in the pollution stock more than compensates the increase in consumer surplus and the decrease in abatement costs resulting in a reduction of social welfare. Thus, our analysis indicates that the lack of commitment has a negative impact of welfare although this detrimental e¤ect decreases with abatement costs.

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“…The bulk of the literature on environmental regulation deals with pollution emitted as a byproduct of daily production activities under various forms of asymmetric information [3,4,7,10,11,17,20,21]. The multiplicity of polluters justifies the use of a natural regulatory instrument, namely markets for pollution permits, on which a large part of the literature revolves.…”

Section: Introductionmentioning

confidence: 99%