IDEAS home Printed from https://ideas.repec.org/p/zbw/cauewp/2441.html
   My bibliography  Save this paper

Collective and Random Fining versus Tax/Subsidy - Schemes to Regulate Non-Point Pollution: An Experimental Study

Author

Listed:
  • Camacho Cuena, Eva
  • Requate, Till

Abstract

In this paper we present results of an experimental study on the performance of three mechanisms which are designed to deal with non-point source pollution : collective fining, random fining, and a tax-subsidy scheme. Our results show that collective and random fining schemes do not induce the subjects to play the efficient equilibrium. Experience from participation in similar treatments further enforces the tendency to under-abate. The taxsubsidy mechanism, by contrast, induces the efficient equilibrium action to be played more frequently than the fining mechanisms, with a slight tendency to over-abate. Experience enforces this tendency. Controlling for the subjects? risk attitude, we find that for risk averse subjects the random fining mechanism outperforms the collective fine.

Suggested Citation

  • Camacho Cuena, Eva & Requate, Till, 2004. "Collective and Random Fining versus Tax/Subsidy - Schemes to Regulate Non-Point Pollution: An Experimental Study," Economics Working Papers 2004-10, Christian-Albrechts-University of Kiel, Department of Economics.
    • Handle: RePEc:zbw:cauewp:2441
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/21986/1/EWP-2004-10.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Spraggon, John, 2002. "Exogenous targeting instruments as a solution to group moral hazards," Journal of Public Economics, Elsevier, vol. 84(3), pages 427-456, June.
    2. Val Eugene Lambson, 1987. "Optimal Penal Codes in Price-setting Supergames with Capacity Constraints," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(3), pages 385-397.
    3. James S. Shortle & Richard D. Horan, 2001. "The Economics of Nonpoint Pollution Control," Journal of Economic Surveys, Wiley Blackwell, vol. 15(3), pages 255-289, July.
    4. François Cochard & Marc Willinger & Anastasios Xepapadeas, 2005. "Efficiency of Nonpoint Source Pollution Instruments: An Experimental Study," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(4), pages 393-422, April.
    5. Herriges Joseph A. & Govindasamy Ramu & Shogren Jason F., 1994. "Budget-Balancing Incentive Mechanisms," Journal of Environmental Economics and Management, Elsevier, vol. 27(3), pages 275-285, November.
    6. Abreu, Dilip, 1988. "On the Theory of Infinitely Repeated Games with Discounting," Econometrica, Econometric Society, vol. 56(2), pages 383-396, March.
    7. Kritikos Alexander S., 1993. "Environmental Policy under Imperfect Information: Comment," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages 89-92, July.
    8. Vossler, Christian A. & Poe, Gregory L. & Schulze, William D. & Segerson, Kathleen, 2002. "An Experimental Test of Ambient-Based Mechanisms for Nonpoint Source Pollution Control," Working Papers 127334, Cornell University, Department of Applied Economics and Management.
    9. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
    10. Segerson, Kathleen, 1988. "Uncertainty and incentives for nonpoint pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 87-98, March.
    11. Francisco Alpízar & Till Requate & Albert Schram, 2004. "Collective versus Random Fining: An Experimental Study on Controlling Ambient Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 29(2), pages 231-252, October.
    12. François Cochard & Marc Willinger & Anastasios Xepapadeas, 2002. "Efficiency of Nonpoint Source Pollution Instruments with Externality Among Polluters:An Experimental Study," Working Papers of BETA 2002-20, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    13. Xepapadeas, A. P., 1991. "Environmental policy under imperfect information: Incentives and moral hazard," Journal of Environmental Economics and Management, Elsevier, vol. 20(2), pages 113-126, March.
    14. Lars Hansen, 1998. "A Damage Based Tax Mechanism for Regulation of Non-Point Emissions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 12(1), pages 99-112, July.
    15. Friedman, James W, 1974. "Non-Cooperative Equilibria in Time-Dependent Supergames," Econometrica, Econometric Society, vol. 42(2), pages 221-237, March.
    16. Alfons Weersink & John R. Livernois & Jason F. Shogren & James S. Shortle, 1998. "Economic Instruments and Environmental Policy in Agriculture," Canadian Public Policy, University of Toronto Press, vol. 24(3), pages 309-327, September.
    17. Eric Rasmusen, 1987. "Moral Hazard in Risk-Averse Teams," RAND Journal of Economics, The RAND Corporation, vol. 18(3), pages 428-435, Autumn.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. COCHARD François & ROZAN Anne & SPAETER Sandrine, 2006. "Prevention and Compensation of Muddy Flows: Some Economic Insights," LERNA Working Papers 06.24.217, LERNA, University of Toulouse.
    2. Reichhuber, Anke & Camacho, Eva & Requate, Till, 2009. "A framed field experiment on collective enforcement mechanisms with Ethiopian farmers," Environment and Development Economics, Cambridge University Press, vol. 14(5), pages 641-663, October.
    3. Pushkarskaya, Helen N., 2006. "Schemes to Regulate Non-Point Water Pollution: Making Sense of Experimental Results," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25507, International Association of Agricultural Economists.
    4. Francois Cochard & Anthony Ziegelmeyer & Kene Boun My, 2005. "The Regulation of Nonpoint Emissions in the Laboratory: A Stress Test of the Ambient Tax Mechanism," Papers on Strategic Interaction 2005-37, Max Planck Institute of Economics, Strategic Interaction Group.
    5. Gaston Giordana & Marc Willinger, 2013. "Regulatory instruments for monitoring ambient pollution," Chapters, in: John A. List & Michael K. Price (ed.), Handbook on Experimental Economics and the Environment, chapter 7, pages 193-232, Edward Elgar Publishing.
    6. François Cochard & Julie Le Gallo & Laurent Franckx, 2015. "Regulation Of Pollution In The Laboratory: Random Inspections, Ambient Inspections, And Commitment Problems," Bulletin of Economic Research, Wiley Blackwell, vol. 67(S1), pages 40-73, December.

    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. Camacho-Cuena, Eva & Requate, Till, 2012. "The regulation of non-point source pollution and risk preferences: An experimental approach," Ecological Economics, Elsevier, vol. 73(C), pages 179-187.
    2. Colson, Gregory & Menapace, Luisa, 2012. "Multiple receptor ambient monitoring and firm compliance with environmental taxes under budget and target driven regulatory missions," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 390-401.
    3. Vossler, Christian A. & Poe, Gregory L. & Schulze, William D. & Segerson, Kathleen, 2002. "An Experimental Test of Ambient-Based Mechanisms for Nonpoint Source Pollution Control," Working Papers 127334, Cornell University, Department of Applied Economics and Management.
    4. Gaston Giordana & Marc Willinger, 2013. "Regulatory instruments for monitoring ambient pollution," Chapters, in: John A. List & Michael K. Price (ed.), Handbook on Experimental Economics and the Environment, chapter 7, pages 193-232, Edward Elgar Publishing.
    5. Suter, Jordan F. & Vossler, Christian A. & Poe, Gregory L., 2009. "Ambient-based pollution mechanisms: A comparison of homogeneous and heterogeneous groups of emitters," Ecological Economics, Elsevier, vol. 68(6), pages 1883-1892, April.
    6. Anastasios Xepapadeas, 2011. "The Economics of Non-Point-Source Pollution," Annual Review of Resource Economics, Annual Reviews, vol. 3(1), pages 355-373, October.
    7. Christian A. Vossler & Gregory L. Poe & William D. Schulze & Kathleen Segerson, 2006. "Communication and Incentive Mechanisms Based on Group Performance: An Experimental Study of Nonpoint Pollution Control," Economic Inquiry, Western Economic Association International, vol. 44(4), pages 599-613, October.
    8. Marc Willinger & Nasreddine Ammar & Ahmed Ennasri, 2014. "Performance of the Ambient Tax: Does the Nature of the Damage Matter?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(3), pages 479-502, November.
    9. Francois Cochard & Anthony Ziegelmeyer & Kene Boun My, 2004. "Regulation of Nonpoint Emissions under Limited Information: A Stress Experimental Test of the Ambient Tax Mechanism," Papers on Strategic Interaction 2003-33, Max Planck Institute of Economics, Strategic Interaction Group.
    10. François Cochard & Marc Willinger & Anastasios Xepapadeas, 2005. "Efficiency of Nonpoint Source Pollution Instruments: An Experimental Study," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(4), pages 393-422, April.
    11. Francois Cochard & Anthony Ziegelmeyer & Kene Boun My, 2005. "The Regulation of Nonpoint Emissions in the Laboratory: A Stress Test of the Ambient Tax Mechanism," Papers on Strategic Interaction 2005-37, Max Planck Institute of Economics, Strategic Interaction Group.
    12. Pushkarskaya, Helen N., 2006. "Schemes to Regulate Non-Point Water Pollution: Making Sense of Experimental Results," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25507, International Association of Agricultural Economists.
    13. COCHARD François & ROZAN Anne & SPAETER Sandrine, 2006. "Prevention and Compensation of Muddy Flows: Some Economic Insights," LERNA Working Papers 06.24.217, LERNA, University of Toulouse.
    14. James Shortle & Richard D. Horan, 2013. "Policy Instruments for Water Quality Protection," Annual Review of Resource Economics, Annual Reviews, vol. 5(1), pages 111-138, June.
    15. Kritikos, Alexander S., 2004. "A penalty system to enforce policy measures under incomplete information," International Review of Law and Economics, Elsevier, vol. 24(3), pages 385-403, September.
    16. Francisco Alpízar & Till Requate & Albert Schram, 2004. "Collective versus Random Fining: An Experimental Study on Controlling Ambient Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 29(2), pages 231-252, October.
    17. Larry Karp, 2005. "Nonpoint Source Pollution Taxes and Excessive Tax Burden," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 31(2), pages 229-251, June.
    18. Gregory L. Poe & William D. Schulze & Kathleen Segerson & Jordan F. Suter & Christian A. Vossler, 2004. "Exploring the Performance of Ambient-Based Policy Instruments When Nonpoint Source Polluters Can Cooperate," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1203-1210.
    19. Jordan F. Suter & Kathleen Segerson & Christian A. Vossler & Gregory L. Poe, 2010. "Voluntary-Threat Approaches to Reduce Ambient Water Pollution," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(4), pages 1195-1213.
    20. Wu, Shang & Palm-Forster, Leah H. & Messer, Kent D., 2021. "Impact of peer comparisons and firm heterogeneity on nonpoint source water pollution: An experimental study," Resource and Energy Economics, Elsevier, vol. 63(C).

    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:zbw:cauewp:2441. 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: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/vakiede.html .

    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.