IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-03194799.html
   My bibliography  Save this paper

Payment for Environmental Services and pollution tax under imperfect competition

Author

Listed:
  • Anneliese Krautkraemer

    (CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)

  • Sonia Schwartz

    (CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)

Abstract

In this paper, we analyse the second best Payment for Environmental Services (PES) design when it interacts with a Pigouvian tax under imperfect competition. We consider farmers who face a choice between producing a conventional or an organic agriculture good. The regulator sets a Pigouvian tax on conventional agriculture as it generates environmental damages, as well as a PES on uncultivated land as buffer strips favor biodiversity. The conventional agriculture sector is perfectly competitive whereas the organic good sector is an oligopoly. We show that the second best level of the Pigouvian tax is higher than the marginal damage whereas the PES is lower than the marginal benefit. We then introduce the marginal social cost of public funds (MCF) and show that the Pigouvian tax increases with the MCF while the PES decreases with the MCF provided that demand for the conventional agriculture good is inelastic.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Anneliese Krautkraemer & Sonia Schwartz, 2021. "Payment for Environmental Services and pollution tax under imperfect competition," Post-Print hal-03194799, HAL.
    • Handle: RePEc:hal:journl:hal-03194799
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Muradian, Roldan & Corbera, Esteve & Pascual, Unai & Kosoy, Nicolás & May, Peter H., 2010. "Reconciling theory and practice: An alternative conceptual framework for understanding payments for environmental services," Ecological Economics, Elsevier, vol. 69(6), pages 1202-1208, April.
    2. Michel Mougeot & Sonia Schwartz, 2008. "Allocation optimale de quotas de pollution et information asymétrique," Revue économique, Presses de Sciences-Po, vol. 59(3), pages 505-515.
    3. B. Caillaud & R. Guesnerie & P. Rey & J. Tirole, 1988. "Government Intervention in Production and Incentives Theory: A Review of Recent Contributions," RAND Journal of Economics, The RAND Corporation, vol. 19(1), pages 1-26, Spring.
    4. Barnett, A H, 1980. "The Pigouvian Tax Rule under Monopoly," American Economic Review, American Economic Association, vol. 70(5), pages 1037-1041, December.
    5. Sattler, Claudia & Trampnau, Susanne & Schomers, Sarah & Meyer, Claas & Matzdorf, Bettina, 2013. "Multi-classification of payments for ecosystem services: How do classification characteristics relate to overall PES success?," Ecosystem Services, Elsevier, vol. 6(C), pages 31-45.
    6. A. Bovenberg, 1999. "Green Tax Reforms and the Double Dividend: an Updated Reader's Guide," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 6(3), pages 421-443, August.
    7. Laffont, Jean-Jacques & Tirole, Jean, 1986. "Using Cost Observation to Regulate Firms," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 614-641, June.
    8. Browning, Edgar K, 1976. "The Marginal Cost of Public Funds," Journal of Political Economy, University of Chicago Press, vol. 84(2), pages 283-298, April.
    9. Bamière, Laure & David, Maia & Vermont, Bruno, 2013. "Agri-environmental policies for biodiversity when the spatial pattern of the reserve matters," Ecological Economics, Elsevier, vol. 85(C), pages 97-104.
    10. Mireille Chiroleu-Assouline, 2001. "Le double dividende. Les approches théoriques," Revue Française d'Économie, Programme National Persée, vol. 16(2), pages 119-147.
    11. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    12. repec:bla:scandj:v:98:y:1996:i:3:p:405-22 is not listed on IDEAS
    13. Buchanan, James M, 1969. "External Diseconomies, Corrective Taxes, and Market Structure," American Economic Review, American Economic Association, vol. 59(1), pages 174-177, March.
    14. Lewis, David J. & Plantinga, Andrew J. & Nelson, Erik & Polasky, Stephen, 2011. "The efficiency of voluntary incentive policies for preventing biodiversity loss," Resource and Energy Economics, Elsevier, vol. 33(1), pages 192-211, January.
    15. Bev Dahlby, 2008. "The Marginal Cost of Public Funds: Theory and Applications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262042509, April.
    16. Jenny Ligthart & Frederick Van Der Ploeg, 1999. "Environmental Policy, Tax Incidence, and the Cost of Public Funds," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 13(2), pages 187-207, March.
    17. van der Ploeg, Frederick & Bovenberg, A Lans, 1994. "Environmental Policy, Public Goods and the Marginal Cost of Public Funds," Economic Journal, Royal Economic Society, vol. 104(423), pages 444-454, March.
    18. Jussi Lankoski & Markku Ollikainen, 2003. "Agri-environmental externalities: a framework for designing targeted policies," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 30(1), pages 51-75, March.
    19. Lawrence Goulder, 1995. "Environmental taxation and the double dividend: A reader's guide," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(2), pages 157-183, August.
    20. Carraro, Carlo & Galeotti, Marzio & Gallo, Massimo, 1996. "Environmental taxation and unemployment: Some evidence on the 'double dividend hypothesis' in Europe," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 141-181, October.
    21. Sattler, Claudia & Matzdorf, Bettina, 2013. "PES in a nutshell: From definitions and origins to PES in practice—Approaches, design process and innovative aspects," Ecosystem Services, Elsevier, vol. 6(C), pages 2-11.
    22. Erik Lichtenberg, 1989. "Land Quality, Irrigation Development, and Cropping Patterns in the Northern High Plains," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 187-194.
    23. Herzon, I. & Birge, T. & Allen, B. & Povellato, A. & Vanni, F. & Hart, K. & Radley, G. & Tucker, G. & Keenleyside, C. & Oppermann, R. & Underwood, E. & Poux, X. & Beaufoy, G. & Pražan, J., 2018. "Time to look for evidence: Results-based approach to biodiversity conservation on farmland in Europe," Land Use Policy, Elsevier, vol. 71(C), pages 347-354.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zylicz, Tomasz, 2010. "Goals and Principles of Environmental Policy," International Review of Environmental and Resource Economics, now publishers, vol. 3(4), pages 299-334, May.
    2. Driss Ezzine-de-Blas & Sven Wunder & Manuel Ruiz-Pérez & Rocio del Pilar Moreno-Sanchez, 2016. "Global Patterns in the Implementation of Payments for Environmental Services," PLOS ONE, Public Library of Science, vol. 11(3), pages 1-16, March.
    3. Mireille Chiroleu-Assouline & Mouez Fodha, 2011. "Verdissement de la fiscalité. À qui profite le double dividende ?," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 409-431.
    4. : Eduardo L. Giménez (a) & Miguel Rodríguez, "undated". "Pigou’S Dividend Versus Ramsey’S Dividend In The Double Dividend Literature," Working Papers 2-06 Classification-JEL :, Instituto de Estudios Fiscales.
    5. Chung-Fu Lai, 2016. "Examining the Double Dividend Effect of Energy Tax with the Overlapping Generations Model," International Journal of Energy Economics and Policy, Econjournals, vol. 6(1), pages 53-57.
    6. Alberto Gago & Xavier Labandeira & Xiral López Otero, 2014. "A Panorama on Energy Taxes and Green Tax Reforms," Hacienda Pública Española / Review of Public Economics, IEF, vol. 208(1), pages 145-190, March.
    7. Claudia Kettner-Marx & Daniela Kletzan-Slamanig, 2018. "Carbon Taxes from an Economic Perspective," WIFO Working Papers 554, WIFO.
    8. Agnar Sandmo, 2003. "Environmental Taxation and Revenue for Development," WIDER Working Paper Series DP2003-86, World Institute for Development Economic Research (UNU-WIDER).
    9. Rodríguez-Ortega, T. & Olaizola, A.M. & Bernués, A., 2018. "A novel management-based system of payments for ecosystem services for targeted agri-environmental policy," Ecosystem Services, Elsevier, vol. 34(PA), pages 74-84.
    10. Rafael Aigner, 2014. "Environmental Taxation and Redistribution Concerns," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 70(2), pages 249-277, June.
    11. Dieter Schmidtchen & Jenny Helstroffer & Christian Koboldt, 2021. "Regulatory failure and the polluter pays principle: why regulatory impact assessment dominates the polluter pays principle," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(1), pages 109-144, January.
    12. Budzinski, Oliver, 2002. "Ecological Tax Reform and Unemployment," Hannover Economic Papers (HEP) dp-251, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    13. Milan Ščasný & Emanuele Massetti & Jan Melichar & Samuel Carrara, 2015. "Quantifying the Ancillary Benefits of the Representative Concentration Pathways on Air Quality in Europe," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(2), pages 383-415, October.
    14. Mireille Chiroleu-Assouline, 2015. "Can environmental taxation in France really become ecological? Current situation and conditions of acceptability," PSE Working Papers halshs-04198162, HAL.
    15. Bösch, Matthias & Elsasser, Peter & Wunder, Sven, 2019. "Why do payments for watershed services emerge? A cross-country analysis of adoption contexts," World Development, Elsevier, vol. 119(C), pages 111-119.
    16. Requate, Till, 2005. "Environmental Policy under Imperfect Competition: A Survey," Economics Working Papers 2005-12, Christian-Albrechts-University of Kiel, Department of Economics.
    17. Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.
    18. Xu, Lili & Lee, Sang-Ho, 2018. "The timing of environmental policies with excess burden of taxation in free-entry mixed markets," MPRA Paper 83560, University Library of Munich, Germany.
    19. Damien Sans, 2015. "Optimal Taxation Rule Reversal in the Presence of Gentle Polluters and Greedy Cleaners," Working Papers halshs-01247190, HAL.
    20. Ronnie Schöb, 2003. "The Double Dividend Hypothesis of Environmental Taxes: A Survey," CESifo Working Paper Series 946, CESifo.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-03194799. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.