Environmental pollution control under alternative incentive structures

摘要: The present study examines environmental pollution control under alternative incentive structures with an emphasis on the effectiveness and practicality of policy tools. focus is three instruments for controlling pollution: (1) Environmental Bonds; (2) Budget Balancing Incentive Mechanisms; (3) Rank Order Tournaments;Environmental bonds typically require more information implementation than either budget balancing mechanisms or rank order tournaments. However, there a trade-off between cost savings from acquiring potential costs committing error in assigning responsibility;Paper I limits to bonds. It identifies major limitations bonds: government moral hazard; liquidity constraints; legal restrictions. Liquidity constraints are factor reducing attractiveness applying agricultural sector;An additional limitation associated that it requires monitoring individual firms. Xepapadeas (1991) introduced scheme risk neutral firms, combining subsidies random penalty. Paper II shows that, contrary Xepapadeas, aversion necessary condition attain compliance. Using Holmstrom (1982) Rasmusen (1987), paper proves compliance can be achieved only if firms sufficiently averse. also social objectives improved by shifting probability detection fine high averse firm low firm. increase number has negative effect compliance;The problem penalty mechanism which optimal abatement objectives, set regulator, may still get penalized when ambient concentration exceeds level. tournament induces effort through among provides solutions both complete penalization problems. shown case designed yield same efficiency conditions as Pigouvian tax relation nonlinear.