Pollution Taxes When Firms Choose Technologies
We consider the properties of a pollution tax when the regulated firm has a discrete choice of technologies with which to reduce pollution. The firm's technology choice makes possible two sequences of play: the traditional one in which the regulator moves first, committing to a tax rate before the firm adopts a technology, and an alternative one in which the firm moves first by adopting a technology. We find that a range of pollution levels, including possibly the first-best one, are unattainable when the regulator moves first. The regulator may be better able to achieve the first-best outcome when the firm moves first.
Year of publication: |
2002
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Authors: | Amacher, Gregory S. ; Malik, Arun S. |
Published in: |
Southern Economic Journal. - Southern Economic Association - SEA. - Vol. 68.2002, 4, p. 891-906
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Publisher: |
Southern Economic Association - SEA |
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