The choice of environmental policy instruments under correlated uncertainty

Shrestha, Ratna K.

doi:10.1016/s0928-7655(00)00043-9

Cited by 14 publications

(4 citation statements)

References 16 publications

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“…Other instruments could then perform better than the two single-value instruments we have looked at (the tax and the noninternationally exchangeable permits): a combination of permits, tax and subsidy, in the spirit of Roberts and Spence (1976) and a non-linear price instrument. However, since costs and benefits are positively correlated, the quantity instrument may then again perform better than these non-linear instruments (Shrestha, 2001). …”

Section: Discussionmentioning

confidence: 99%

Complying with the Kyoto Protocol under uncertainty: Taxes or tradable permits?

Quirion¹

2010

Energy Policy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in SummaryThe Kyoto Protocol on climate change allocates tradable quotas to developed countries, but lets them free to choose the means to respect their quota. There are good reasons for a country not to control its firms through internationally tradable permits. We thus compare a tax and purely domestic tradable permits for the European Union, the U.S and Japan. Information on abatement costs and international permit price is imperfect and stems from nine global models. Permits perform better than a tax for Japan and the U.S., whereas both instruments yield a similar outcome for Europe. Applying Weitzman (1974)'s framework in this new context, we show that these results are due to the positive correlation between costs and benefits: models that predict a low abatement cost in one country generally do so in others too, thereby forecasting a low international permit price.

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Section: Discussionmentioning

confidence: 99%

Complying with the Kyoto Protocol under uncertainty: Taxes or tradable permits?

Quirion¹

2010

Energy Policy

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“…Correlated externality is not to be confused with ''correlated uncertainty'' that may exist between the costs and benefits associated with controlling a single externality (either localized or global). For examples of how correlated uncertainty can affect the choice of policy instruments see Shrestha (2001) and Stavins (1996). 2.…”

Section: Discussionmentioning

confidence: 99%

A Comparison of Emission Taxes and Permit Markets for Controlling Correlated Externalities

Caplan

2006

Environ Resource Econ

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This paper provides an answer to the question: Are emission taxes an efficient and self-enforcing mechanism to control correlated externality problems? By “correlated externalities” we mean multiple pollutants that are jointly produced by a single source but cause differentiated regional and global externalities. By “self-enforcing” we mean a mechanism that accounts for the endogeneity that exists between competing jurisdictions in the setting of environmental policy within a federation of regions. This mechanism incorporates sequential decision making among the jurisdictions and therefore determines an equilibrium based on the concept of subgame perfection. We find that, unlike joint domestic and international tradable permit markets, joint emission taxes and a hybrid scheme of permits and taxes are neither efficient nor self-enforcing. Copyright Springer 2006correlated externalities, hybrid scheme, joint emission taxes, joint permits, C72, D62, D78, H41, H77, Q28,

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“…When uncertainty about marginal cost and benefi t are correlated Shrestha (2001) suggests that an emission standard instrument could be better or worse than a nonlinear tax instrument depending on the nature of correlation. In the presence of external learning effects, Rosendahl (2004) challenges the optimality of uniform Pigouvian tax across all emission sources.…”

Section: Optimalitymentioning

confidence: 99%

Public policy and corporate environmental behaviour: a broader view

Sarkar

2007

Corp Soc Responsibility Env

110

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Corporate strategies to manage the business-ecological environment interface have evolved against the backdrop of regulatory pressures and stakeholder activism. Despite its relevance with respect to sustainable development, a well developed theory encompassing all aspects of corporate environmental behaviour, especially incorporating incentive compatible public policy measures, is yet to be developed. This paper is a step in this direction, aiming to assimilate contributions related to different aspects of corporate environmental behaviour, capturing the transition from environmental management to environmental strategy. In the process we identify areas where there is a need for further research. We fi nd that there is plenty of scope in developing more complex models to explain a manager's rationale for adopting sustainable strategies in the backdrop of the policy regime, and in conducting more empirical (both descriptive and quantitative) work to obtain clearer insights into managerial decisions.

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The choice of environmental policy instruments under correlated uncertainty

Cited by 14 publications

References 16 publications

Complying with the Kyoto Protocol under uncertainty: Taxes or tradable permits?

Complying with the Kyoto Protocol under uncertainty: Taxes or tradable permits?

A Comparison of Emission Taxes and Permit Markets for Controlling Correlated Externalities

Public policy and corporate environmental behaviour: a broader view

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