Markets and environmental management with a storable pollutant
Lee investigates possibilites where pollutants may be stored for a period of time and later released into the environment when adverse effects are minimal. The treatment and storage of pollutants before their release into the environment is a crucial part of many abatement programs. Surprisingly, emission charges will not induce optimal abatement when storage is possible. This occurs because the firms' response to the dynamic tax is indeterminant. We suggest alternative controls, whereby rights to emit pollutants are sold competitively and demonstrate that markets provide incentives for the optimal generation-storage-emission of pollution by firms. In deriving this result, an important difference between markets and taxes is revealed. With markets there is still indeterminacy at the firm level, but the aggregate response of all firms is dictated by market forces that insure pollution is reduced by some desired amount. 32 references.
- Research Organization:
- California Inst. of Tech., Pasadena
- OSTI ID:
- 6243308
- Journal Information:
- J. Environ. Econ. Manage.; (United States), Journal Name: J. Environ. Econ. Manage.; (United States) Vol. 8:1; ISSN JEEMD
- Country of Publication:
- United States
- Language:
- English
Similar Records
Incentives for advanced pollution abatement technology at the industry level: An evaluation of policy alternatives
Standards versus standards: The incentive and efficiency effects of pollution-control restrictions