Optimal monitoring to implement a clean technology when emissions are random
Macho Stadler, Inés (Universitat Autònoma de Barcelona. Departament d'Economia i d'Història Econòmica)
Pérez-Castrillo, David (Universitat Autònoma de Barcelona. Departament d'Economia i d'Història Econòmica)

Date:	2010
Abstract:	We consider a model of polluting firms subject to tax on emissions, monitoring, and penalties in case of underreporting and which face a choice between a more expensive clean and a less expensive dirty technology. Moreover, emissions are subject to random events. We show that the optimal monitoring is a cut-off policy, where all reports below a threshold are inspected with the same probability, while reports above the threshold are not monitored. If the adoption of the technology is firms' private information, too few firms will adopt the clean technology under the optimal monitoring policy. However, when the environmental agency can check the technology adopted by the firms, the optimal policy may induce overswitching or underswitching to the clean technology.
Grants:	Ministerio de Educación y Ciencia SEJ2006-00538 Ministerio de Ciencia e Innovación ECO2009-07616 Agència de Gestió d'Ajuts Universitaris i de Recerca 2009/SGR-169
Note:	Financial support from SEJ2006-538, ECO2009-7616, Consolider-Ingenio CSD2006-16, 2009SGR-169, Barcelona Economics-Xarxa CREA and ICREA Academia
Note:	Altres ajuts: CONSOLIDER-INGENIO/CSD2006-16
Rights:	Aquest document està subjecte a una llicència d'ús Creative Commons. Es permet la reproducció total o parcial, la distribució, la comunicació pública de l'obra i la creació d'obres derivades, fins i tot amb finalitats comercials, sempre i quan es reconegui l'autoria de l'obra original.
Document:	Article
Subject:	Production technology ; Random emissions ; Environmental taxes ; Optimal monitoring policy
Published in:	Series, Vol. 1 (2010), p. 277-304, ISSN 1869-4195

28 p, 383.1 KB

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