Economics of enforcing pollution taxation
The efficient structure of pollution tax policy is examined when it is recognized that enforcing compliance will be costly. There are two components of this cost: 1) the direct cost of enforcement and 2) the cost polluters incur avoiding enforcement. Considering only the first cost, the efficient pollution policy calls for a tax in excess of that conventionally recommended as efficient, T*, but with little enforcement. Once avoidance cost is recognized the efficient policy can be substantially altered; requiring a tax lower than T*, but with greater enforcement. Even when direct enforcement cost is zero, it is shown that there is no unique advantage to T* in the absence of avoidance cost. 12 references, 4 figures.
- Research Organization:
- George Mason Univ., Farifax, VA
- OSTI ID:
- 6852833
- Journal Information:
- J. Environ. Econ. Manage.; (United States), Vol. 11:2
- Country of Publication:
- United States
- Language:
- English
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