Regulation via the Polluter-Pays Principle

Ambec, Stefan and Ehlers, Lars (2016) Regulation via the Polluter-Pays Principle. The Economic Journal, 126 (593). pp. 884-906.

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Official URL: http://tse-fr.eu/pub/28295

Abstract

We consider the problem of regulating an economy with environmental pollution. We examine the distributional impact of the polluter-pays principle which requires that any agent compensates all other agents for the damages caused by his or her (pollution) emissions. With constant marginal damages we show that regulation via the polluter-pays principle leads to the unique welfare distribution that induces non-negative individual welfare change and renders each agent responsible for his or her pollution impact. We extend both the polluter-pays principle and this result to increasing marginal damages due to pollution. We also compare the polluter-pays principle with the Vickrey-Clark-Groves scheme.

Item Type: Article
Language: English
Date: June 2016
Refereed: Yes
Uncontrolled Keywords: Regulation, Polluter-Pays Principle, Fairness, Pollution, Externalities
JEL codes: C7 - Game Theory and Bargaining Theory
D02 - Institutions - Design, Formation, and Operations
D30 - General
D6 - Welfare Economics
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 16 Mar 2015 14:48
Last Modified: 07 Mar 2018 13:23
OAI ID: oai:tse-fr.eu:28295
URI: http://publications.ut-capitole.fr/id/eprint/16530

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