Optimal monitoring to implement clean technologies when pollution is random

Artikel

We consider a model of polluting firms subject to tax on emissions, monitoring, and penalties in case of underreporting and which face a choice between a more expensive clean and a less expensive dirty technology. Moreover, emissions are subject to random events.We show that the optimal monitoring is a cut-off policy, where all reports below a threshold are inspected with the same probability, while reports above the threshold are not monitored. If the adoption of the technology is firms' private information, too few firms will adopt the clean technology under the optimal monitoring policy. However, when the environmental agency can check the technology adopted by the firms, the optimal policy may induce overswitching or underswitching to the clean technology.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: SERIEs - Journal of the Spanish Economic Association ; ISSN: 1869-4195 ; Volume: 1 ; Year: 2010 ; Issue: 3 ; Pages: 277-304 ; Heidelberg: Springer

Classification and Topics

• Classification: Wirtschaft ; Energy, Environmental, Health, and Safety Law ; Illegal Behavior and the Enforcement of Law ; Asymmetric and Private Information; Mechanism Design
• Subject: production technology ; random emissions ; environmental taxes ; optimal monitoring policy ; Umweltpolitik ; Kontrolle ; Umweltbelastung ; Fertigungstechnik ; Technologiewahl ; Umweltschutz ; Ökosteuer ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Macho-Stadler, Inés ; Pérez-Castrillo, David
• Event: Veröffentlichung
• (who): Springer
• (where): Heidelberg
• (when): 2010

Further information

• DOI: doi:10.1007/s13209-010-0023-6
• Handle: http://hdl.handle.net/10419/77773
• Last update: 10.03.2025, 11:43 AM CET