Pollutant with Endogenous Abatement Costs and Asymmetric Information（与内源性污染物减排成本和信息不对称）.pdfVIP

Department of Agricultural and Resource Economics, UCB UC Berkeley Title: Taxes Versus Quantities for a Stock Pollutant with Endogenous Abatement Costs and Asymmetric Information Author: Karp, Larry, University of California, Berkeley and Giannini Foundation Zhang, Jiangfeng, Asian Development Bank Publication Date: 07-21-2008 Series: Other Recent Work Publication Info: Other Recent Work, Department of Agricultural and Resource Economics, UCB, UC Berkeley Permalink: /uc/item/84q0s8tb Keywords: Pollution control; Investment, asymmetric information, rational expectations, choice of instruments Local Identifier: 1064 Abstract: Non-strategic firms with rational expectations make investment and emissions decisions. The investment rule depends on firms’ beliefs about future emissions policies. We compare emissions taxes and quotas when the (strategic) regulator and (nonstrategic) firms have asymmetric information about abatement costs, and all agents use Markov Perfect decision rules. Emissions taxes create a secondary distortion at the investment stage, unless a particular condition holds; emissions quotas do not create a secondary distortion. We solve a linear-quadratic model calibrated to represent the problem of controlling greenhouse gasses. The endogeneity of abatement capital favors taxes, and it increases abatement. eScholarship provides open access, scholarly publishing services to the University of California and delivers a dynamic research platform to scholars worldwide. Department of Agricultural Resourc