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Regulating pollution with endogenous monitoring

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  • K. Millock

    (CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • D. Sunding

    (UC Berkeley - University of California [Berkeley] - UC - University of California)

  • D. Zilberman

    (UC Berkeley - University of California [Berkeley] - UC - University of California)

Abstract

The paper offers a new perspective on nonpoint source pollution by explicitly considering the cost of monitoring individual emissions. The distinction between point and nonpoint source pollution is shown to depend on the cost of monitoring, the environmental cost of pollution, and the impact of monitoring on profits. A regulatory scheme of differential taxation is proposed, wherein taxes are predicated on whether the agent has installed an emissions monitoring device. The optimal degree of monitoring as well as conditions for optimal regulation in the extreme cases of no monitoring and full monitoring, is identified. © 2002 Elsevier Science (USA).

Suggested Citation

  • K. Millock & D. Sunding & D. Zilberman, 2002. "Regulating pollution with endogenous monitoring," Post-Print hal-00716791, HAL.
    • Handle: RePEc:hal:journl:hal-00716791
    DOI: 10.1006/jeem.2001.1208
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    References listed on IDEAS

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