Who Should Bear the Administrative Costs of an Emissions Tax?

All environmental policies involve administrative costs, the costs of implementing and managing policies that extend beyond abatement costs. We examine theoretically the optimal distribution of these costs between the public and regulated sources of pollution. The distribution of administrative costs affects social welfare only if public funds are more expensive than private funds, or if the distribution of administrative costs affects the size of a regulated industry. If having the public take on a larger part of administrative costs increases the size of the industry and this does not lead to lower emissions for a given emissions tax, then it is optimal to make the pollution sources bear all of the administrative costs. A necessary, but not sufficient, reason for having the public bear part of the cost burden is if aggregate emissions decrease as a result.

Issue Date:
Apr 05 2011
Publication Type:
Working or Discussion Paper
DOI and Other Identifiers:
Record Identifier:
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Total Pages:
JEL Codes:
L51; Q58
Series Statement:
Working Paper

 Record created 2017-04-01, last modified 2020-10-28

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