Prices versus quantities with incomplete enforcement

• 成果类型: Article
• 署名作者: Montero, JP
• 署名单位: Pontificia Universidad Catolica de Chile; Massachusetts Institute of Technology (MIT)
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/S0047-2727(01)00096-2
• 发表日期: 2002
• 页码: 435-454
• 关键词: Environmental regulation; uncertainty; incomplete enforcement

摘要

I study whether incomplete enforcement of a regulation has any impact on the choice between price (e.g., taxes) and quantity (e.g., tradeable quotas) instruments. Results indicate that a second-best design accounting for incomplete enforcement can be implemented equally well with either instrument as long as the benefit and cost curves are known with certainty. If these curves are uncertain to the regulator, however, the quantity instrument performs relatively better than the price instrument. The reason is that the effective amount of control under the quantity instrument is no longer fixed, which makes this instrument come closer to a non-linear instrument. (C) 2002 Elsevier Science B.V. All rights reserved.