Prices vs quantities: The case of risk averse agents

Arbeitspapier

We explore the efficacy of price and quantity controls as environmental policy instruments in a stochastic setting in which agents are risk averse. We demonstrate that the assumption of risk aversion may improve the performance of a tax relative to that of a system of tradable quotas, and that restricting quota trade may enhance efficiency even though risk aversion in itself limits volumes of trade. The government may be able to improve the performance of a tradable quota system by judicious choice of distribution and amount of initial quotas and by trading pro-actively in the quota market.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Memorandum ; No. 2002,01

Classification and Topics

• Classification: Wirtschaft ; Criteria for Decision-Making under Risk and Uncertainty ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies ; Economics of Regulation ; Renewable Resources and Conservation: Government Policy ; Nonrenewable Resources and Conservation: Government Policy
• Subject: regulation ; effluent taxes ; tradable quotas ; uncertainty ; risk aversion ; environmental management ; Quotenregulierung ; Ökosteuer ; Umweltpolitik ; Risikoaversion ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Baldursson, Fridrik M. ; Fehr, Nils-Henrik M. von der
• Event: Veröffentlichung
• (who): University of Oslo, Department of Economics
• (where): Oslo
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/63112
• Last update: 10.03.2025, 11:41 AM CET