Optimal pollution standards and non-compliance in a dynamic framework
Entity
UAM. Departamento de Análisis Económico, Teoría Económica e Historia EconómicaDate
2014Serie/Num.
Economic analysis working papers series. 8/2014Subjects
Non-compliance; Fines; Pollution standards; Dynamic regulation; Stackel- berg differential games; EconomíaAbstract
In this paper we present a Stackelberg differential game to study the dynamic interaction
between a polluting firm and a regulator who sets pollution limits overtime. At each time,
the firm settles emissions taking into account the fine for non-compliance, and balances
current costs of investments in a capital stock which allows for future emission reductions.
We show that the optimal effective pollution limit path, which is the pollution level above
which the fine is truly imposed, decreases overtime, inducing a rise in capital stock and a
decrease in both emissions and the level of non-compliance. If the effective pollution limit
coincides with the pollution limit set by the regulator, we generally find a bounded value
of the severity of the fine that maximizes social welfare. If the effective pollution limit is
larger than the pollution limit set by the regulator due to fine discounts in exchange for
firm’s investment in capital, the effect of a more severe fine depends on the magnitude of
this discount. In the limiting scenario with a sufficiently large severity of the fine, emissions
coincide with the effective pollution limit and no penalties are levied, since the firm shows
adequate adaptation progress through capital investment.
Files in this item
Google Scholar:Arguedas Tomás, María del Carmen
-
Cabo, Francisco
-
Martín-Herrán, Guiomar
This item appears in the following Collection(s)
Related items
Showing items related by title, author, creator and subject.
-
Genetic landscape of 6089 inherited retinal dystrophies affected cases in Spain and their therapeutic and extended epidemiological implications
Perea-Romero, Irene; Gordo, Gema; Iancu, Ionut F.; Del Pozo-Valero, Marta; Almoguera, Berta; Blanco-Kelly, Fiona; Carreño, Ester; Jimenez-Rolando, Belen; Lopez-Rodriguez, Rosario; Lorda-Sanchez, Isabel; Martin-Merida, Inmaculada; Pérez de Ayala, Lucia; Riveiro-Alvarez, Rosa; Rodriguez-Pinilla, Elvira; Tahsin-Swafiri, Saoud; Trujillo-Tiebas, Maria J.; Bustamante-Aragones, Ana; Cardero-Merlo, Rocio; Fernandez-Sanchez, Ruth; Gallego-Merlo, Jesus; Garcia-Vara, Ines; Gimenez-Pardo, Ascension; Horcajada-Burgos, Laura; Infantes-Barbero, Fernando; Lantero, Esther; Lopez-Martinez, Miguel A.; Martinez-Ramas, Andrea; Ondo, Lorena; Rodriguez de Alba, Marta; Sanchez-Jimeno, Carolina; Velez-Monsalve, Camilo; Villaverde, Cristina; Zurita, Olga; Aguilera-Garcia, Domingo; Aguirre-Lamban, Jana; Arteche, Ana; Cantalapiedra, Diego; Fernandez-San Jose, Patricia; Galbis-Martinez, Liliana; Garcia-Hoyos, Maria; Lombardia, Carlos; Lopez-Molina, Maria I.; Perez-Carro, Raquel; Da Silva, Luciana R.J.; Ramos, Carmen; Sanchez-Alcudia, Rocio; Sanchez-Navarro, Iker; Tatu, Sorina D.; Vallespin, Elena; Aller, Elena; Bernal, Sara; Gamundi, Maria J.; Garcia-Garcia, Gema; Hernan, Inmaculada; Jaijo, Teresa; Antiñolo, Guillermo; Baiget, Montserrat; Carballo, Miguel; Millan, Jose M.; Valverde, Diana; Allikmets, Rando; Banfi, Sandro; Cremers, Frans P.M.; Collin, Rob W.J.; De Baere, Elfride; Hakonarson, Hakon; Kohl, Susanne; Rivolta, Carlo; Sharon, Dror; Alonso-Cerezo, Maria C.; Ballesta-Martinez, Maria J.; Beltran, Sergi; Benito Lopez, Carmen; Català-Mora, Jaume; Catalli, Claudio; Cotarelo-Perez, Carmen; Fernandez-Burriel, Miguel; Fontalba-Romero, Ana; Galán-Gómez, Enrique; Garcia-Barcina, Maria; Garcia-Cruz, Loida M.; Gener, Blanca; Gil-Fournier, Belen; Govea, Nancy; Guillen-Navarro, Encarna; Hernando Acero, Ines; Irigoyen, Cristina; Izquierdo-Álvarez, Silvia; Llano-Rivas, Isabel; López-Ariztegui, Maria A.; Lopez-Gonzalez, Vanesa; Lopez-Grondona, Fermina; Martorell, Loreto; Mendez-Perez, Pilar; Moreno-Igoa, Maria; Oancea-Ionescu, Raluca; Palau-Martinez, Francesc; Perez de Nanclares, Guiomar; Ramos-Fuentes, Feliciano J.; Rodriguez-Lopez, Raquel; Ayuso García, María del Carmen Tomasa
2021-12-01