Clemens Heuson
Weitzman revisited: Emission standards vs. taxes
with uncertain control costs and market power of polluting firms
Abstract:
It is well known that uncertainty concerning firms’ costs as
well as market power of the latter have to be taken into account in
order to design and choose environmental policy instruments in an
optimal way. As a matter of fact, in most actual regulation settings
the policy maker has to face both of these complications
simultaneously. However, hitherto environmental economic theory has
restricted to either of them when submitting conventional policy
instruments to a comparative analysis. The article at hand takes a
first step in closing this gap. It investigates the welfare effects of
emission standards and taxes against the background of uncertain
emission control costs and various degrees of the polluting
firms’ market power.
JEL: D62, D89, L13, Q58
Paper:
Paper available as pdf-file.
Beitrag Nr. 299, Volkswirtschaftliche Diskussionsreihe, Institut
für
Volkswirtschaftslehre der Universität Augsburg
Contact:
Clemens
Heuson
v.
K., 17.03.2008