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Experiments on Damage-Based Ambient Taxes for Nonpoint Source Polluters

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  • Jordan F. Suter
  • Christian A. Vossler
  • Gregory L. Poe
  • Kathleen Segerson

Abstract

This article presents experimental tests of a linear and a nonlinear ambient tax mechanism that involve modest information requirements for the regulator. When agents are not allowed to communicate, both tax mechanisms result in emission levels that approximate the social optimum. When agents can communicate, emissions are considerably below the optimum, but we show that the tax function can be scaled to achieve social efficiency. Finally, by disaggregating the overall efficiency measure, we show that changing the pollution threshold that triggers the tax increases the inefficiency resulting from variation in agent-level decisions, but does not affect average emissions. Copyright 2008, Oxford University Press.

Suggested Citation

  • Jordan F. Suter & Christian A. Vossler & Gregory L. Poe & Kathleen Segerson, 2008. "Experiments on Damage-Based Ambient Taxes for Nonpoint Source Polluters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(1), pages 86-102.
    • Handle: RePEc:oup:ajagec:v:90:y:2008:i:1:p:86-102
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2007.01055.x
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