Second-Best Environmental Policy and Nonconvexities : The Asymmetry Between Taxes and Tradeable Permits

In second-best environmental policies, nonconvexities arise because of decreasing marginal pollution abatement costs. In this case, we chow that, unlike tradeable permits, taxes may introduce incorrect incentives. Moreover, even when taxes lead to efficient solutions, the tax rate should not be based on marginal pollution abatement cost, but to average costs.

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Year of publication:	1996
Authors:	Baranzini, A
Institutions:	Institut d'Economie et Econométrie, Université de Genève
Subject:	POLLUTION CONTROL \| POLLUTION LEVEL \| REGULATION

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Series:	Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva.
Type of publication:	Book / Working Paper
Notes:	8 pages
Classification:	O33 - Technological Change: Choices and Consequences; Diffusion Processes ; K32 - Environmental, Health, and Safety Law ; G18 - Government Policy and Regulation
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010584312