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An emission tax pollution control system with imperfect monitoring

Author

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  • Hsiao-Chi Chen

    (National Taipei University)

  • Shi-Miin Liu

    (National Taipei University)

Abstract

This article analyzes regulator and polluting firm behavior in an emission tax system with imperfect monitoring, and contrasts the associated results with those under perfect monitoring. It is found that the firm’s optimal emissions may depend on either monitoring probability or emission tax for perfect monitoring, while they are affected by both monitoring probability and emission tax in imperfect monitoring. Moreover, as monitoring probability increases, the firm could abate fewer emissions in imperfect monitoring. The relative sizes of equilibrium monitoring probability in the two monitoring setups are uncertain.

Suggested Citation

  • Hsiao-Chi Chen & Shi-Miin Liu, 2009. "An emission tax pollution control system with imperfect monitoring," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 10(1), pages 21-40, March.
    • Handle: RePEc:spr:envpol:v:10:y:2009:i:1:d:10.1007_bf03353977
    DOI: 10.1007/BF03353977
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    References listed on IDEAS

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    Cited by:

    1. Keisaku Higashida, 2019. "Burden of Inspection Costs and Effectiveness of Environmental Regulations," Discussion Paper Series 189, School of Economics, Kwansei Gakuin University.

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