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Is the “average Pigouvian tax” robust to the size of the group of polluters?

Author

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  • Hamet Sarr

    (UMR GESTE - Gestion Territoriale de l'Eau et de l'environnement - ENGEES - École Nationale du Génie de l'Eau et de l'Environnement de Strasbourg - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Mohamed Ali Bchir

    (UMR GESTE - Gestion Territoriale de l'Eau et de l'environnement - ENGEES - École Nationale du Génie de l'Eau et de l'Environnement de Strasbourg - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • François Cochard

    (CRESAT - Centre de recherches sur les économies, les sociétés, les arts et les techniques - CRESAT - UR3436 - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar)

  • Anne Rozan

    (UMR GESTE - Gestion Territoriale de l'Eau et de l'environnement - ENGEES - École Nationale du Génie de l'Eau et de l'Environnement de Strasbourg - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

We study the "average Pigouvian tax" (APT), an ambient-based policy instrument that requires polluters to cooperate to achieve the social optimum. In this paper, we are interested in the group size variation and its effect of the APT efficiency. Indeed, in the field, the implementation of the instrument will face group sizes that can vary from a few to a large number of farmers. We find that increasing the size of the group reduces cooperation among subjects, thereby reducing the efficiency of the instrument. We also show that when the sucker's cost is lowered, the instrument can converge towards the social optimum.

Suggested Citation

  • Hamet Sarr & Mohamed Ali Bchir & François Cochard & Anne Rozan, 2021. "Is the “average Pigouvian tax” robust to the size of the group of polluters?," Post-Print hal-03662042, HAL.
    • Handle: RePEc:hal:journl:hal-03662042
    DOI: 10.1007/s41130-021-00145-z
    Note: View the original document on HAL open archive server: https://hal.science/hal-03662042
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    Keywords

    Nonpoint source pollution; Ambient-based taxes; Cooperation; Size effect; sucker’s payoff;
    All these keywords.

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