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Please use this identifier to cite or link to this item: http://hdl.handle.net/2108/364

Title: Multi pollutant yardstick schemes as environmental policy tools
Authors: Brose, Isabel
D'Amato, Alessio
Franckx, Laurent
Keywords: asymmetric information
environmental regulation
yardstick competition
Issue Date: Dec-2005
Publisher: CEIS
Series/Report no.: CEIS Tor Vergata Research Paper; 77
Abstract: We consider environmental regulation of n risk-averse, multiple pollutant firms. We develop a yardstick competition scheme where the regulatory scheme depends on the difference between a firm's aggregate performance and the average aggregate performance of the industry. Whether this instrument dominates Pigouvian taxation depends on the complete structure of the covariance matrix of the common random terms in measured pollution. Moreover, if the number of firms is large enough, the yardstick scheme is always superior to Pigouvian taxation. This analysis also provides new arguments in favor of strict liability rather than negligence liability as a regulatory tool.
URI: http://ssrn.com/abstract=871400
Appears in Collections:Research papers

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