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Título : Environmental Regulation: Choice of Instruments under Imperfect Compliance
Autor : Macho-Stadler, Inés
Palabras clave : Environmental regulation
Audits and compliance
Environmental standards
Fecha de publicación : 20-nov-2006
Serie : UFAE and IAE Working Papers
673.06
Resumen: Compliance is an important issue in environmental regulation. In this paper, we discuss some of the key elements of the problem and analyze a situation where emissions are not random and firms are risk-neutral. We study the firm's decision on emissions and compliance when the environmental regulation is based on standards and the enforcement agency audits the firm with a certain probability. We then compare total emissions when environmental regulation is based on different instruments: standards, taxes, and tradable permits. We show that when compliance is an issue, environmental taxes are superior to the other instruments. We also analyze the (static) efficiency of the solution.
URI : http://hdl.handle.net/10261/1706
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