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On the interaction between imperfect compliance and technology adoption: taxes versus tradable emissions permits

Villegas-Palacio, C and Coria, Jessica (2010) In Journal of Regulatory Economics 38(3). p.274-291
Abstract
This paper analyzes the effects of the interaction between technology adoption and incomplete enforcement on the extent of violations and the rate of abatement technology adoption. We focus on price-based and quantity-based emission regulations. First, we show that in contrast to uniform taxes, under tradable emissions permits (TEPs), the fall in permit price produced by technology adoption reduces the benefits of violating the environmental regulation at the margin and leads firms to modify their compliance behavior. Moreover, when TEPs are used, the deterrent effect of the monitoring effort is reinforced by the effect that technology adoption has on the extent of violations. Second, we show that the regulator may speed up the diffusion... (More)
This paper analyzes the effects of the interaction between technology adoption and incomplete enforcement on the extent of violations and the rate of abatement technology adoption. We focus on price-based and quantity-based emission regulations. First, we show that in contrast to uniform taxes, under tradable emissions permits (TEPs), the fall in permit price produced by technology adoption reduces the benefits of violating the environmental regulation at the margin and leads firms to modify their compliance behavior. Moreover, when TEPs are used, the deterrent effect of the monitoring effort is reinforced by the effect that technology adoption has on the extent of violations. Second, we show that the regulator may speed up the diffusion of new technologies by increasing the stringency of the enforcement strategy in the case of TEPs while in the case of uniform taxes, the rate of adoption does not depend on the enforcement parameters. (Less)
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author
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Technological adoption, Environmental policy, Imperfect compliance, Enforcement
in
Journal of Regulatory Economics
volume
38
issue
3
pages
274 - 291
publisher
Springer
external identifiers
  • scopus:78649753686
ISSN
0922-680X
DOI
10.1007/s11149-010-9125-0
project
BECC
language
English
LU publication?
no
id
2b04ebb2-713b-4116-9c22-77c651a8eef7 (old id 4448730)
date added to LUP
2014-05-23 12:11:28
date last changed
2018-05-29 10:03:24
@article{2b04ebb2-713b-4116-9c22-77c651a8eef7,
  abstract     = {This paper analyzes the effects of the interaction between technology adoption and incomplete enforcement on the extent of violations and the rate of abatement technology adoption. We focus on price-based and quantity-based emission regulations. First, we show that in contrast to uniform taxes, under tradable emissions permits (TEPs), the fall in permit price produced by technology adoption reduces the benefits of violating the environmental regulation at the margin and leads firms to modify their compliance behavior. Moreover, when TEPs are used, the deterrent effect of the monitoring effort is reinforced by the effect that technology adoption has on the extent of violations. Second, we show that the regulator may speed up the diffusion of new technologies by increasing the stringency of the enforcement strategy in the case of TEPs while in the case of uniform taxes, the rate of adoption does not depend on the enforcement parameters.},
  author       = {Villegas-Palacio, C and Coria, Jessica},
  issn         = {0922-680X},
  keyword      = {Technological adoption,Environmental policy,Imperfect compliance,Enforcement},
  language     = {eng},
  number       = {3},
  pages        = {274--291},
  publisher    = {Springer},
  series       = {Journal of Regulatory Economics},
  title        = {On the interaction between imperfect compliance and technology adoption: taxes versus tradable emissions permits},
  url          = {http://dx.doi.org/10.1007/s11149-010-9125-0},
  volume       = {38},
  year         = {2010},
}