TAXES AND QUOTAS FOR A STOCK POLLUTANT WITH MULTIPLICATIVE UNCERTAINTY

We compare taxes and quotas when firms' and the regulator have asymmetric information about the slope of firms' abatement costs. Damages are caused by a stock pollutant. We calibrate the model using cost and damage estimates of greenhouse gasses. Taxes dominate quotas, as with additive uncertainty. This model with multiplicative uncertainty allows us to compare expected stock levels under the two policies, and to investigate the importance of stock size and the magnitude of uncertainty on the policy ranking.


Issue Date:
2000
Publication Type:
Working or Discussion Paper
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/25030
PURL Identifier:
http://purl.umn.edu/25030
Total Pages:
39
JEL Codes:
H21; Q28
Note:
Replaced with revised version of paper 02/06/06.
Series Statement:
Working Paper 870 Rev.




 Record created 2017-04-01, last modified 2019-08-26

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