Refunding Emission Payments: Output-Based Versus Expenditure-Based Refunding

We analyse two mechanism designs for refunding emission payments to polluting firms: output-based refunding (OBR) and expenditure-based refunding (EBR). In both instruments, emission fees are returned to the polluting industry, typically making the policy more politically acceptable than a standard tax. The crucial difference between OBR and EBR is that the fees are refunded in proportion to output in the former but in proportion to the firms’ expenditure on abatement technology equipment in the latter. To achieve the same abatement target as a standard tax, the fee level in the OBR design is higher, whereas the fee level in the EBR design is lower. The use of OBR and EBR may lead to large differences in the distribution of output and costs across firms. Both designs imply a cost-ineffective provision of abatement, as firms put relatively too much effort into reducing emissions through abatement technology compared with reducing output. However, a standard tax may be politically infeasible and maintaining output may be seen as a political advantage by policymakers if they seek to avoid activity reduction in the regulated sector.

Promotion of Green Technology under Different Environmental Policies

In this paper, I develop a two-stage game of pollution abatement technology adoption in a Cournot oligopoly to investigate a firm’s decision to adopt pollution abatement technology. In particular, I study the adoption incentives and welfare implications of popular environmental policies, namely emission fees and quotas. Tradeable permits result in identical outcomes to emission fees. Within each policy regime, the conditions for Nash equilibria are identified where both firms invest in the green technology, neither firm invests in the technology, or only one firm invests. The following extensions are also analyzed: asymmetric adoption costs, increase in the marginal cost of production from adoption, and a type-dependent fee where adoption reduces the emission fee. Social welfare under an emission fee is identical to that under a quota. However, when policy is (not) stringent, firms are more willing to adopt expensive technology under a fee (quota) than under a quota (fee, respectively).

Economic Instruments for Sustainable Environmental Management

Environmental pollution has been continuously threatening the world. In the combat with environmental pollution problems, waste management authorities, in compliance with the “User Pays Principle-USP”, apply the “Polluter Pays Principle-3Ps” to the waste generators. Thus the resource users and the waste generators will be paying a fee for the resources and services they are using. They can be summarized as water fee, wastewater discharge fee, effluent permit fee, air emission fees, solid waste disposal fee, landfill tax, and hazardous waste tax and product charge, Advance Disposal Fee (ADF), Ozone-Depleting Chemicals (ODC), government product charge and road user fees. The main purpose of charging a fee is to encourage the users and the polluters to reduce the amount of pollutants they are generating and disposing into the environment. These fees can also be named as “a pollution charge fee”, “user charge fee” or “product charge fee”. This chapter outlines the many existing waste fee models.

Economic Instruments for Sustainable Environmental Management

Environmental pollution has been continuously threatening the world. In the combat with environmental pollution problems, waste management authorities, in compliance with the “User Pays Principle-USP”, apply the “Polluter Pays Principle-3Ps” to the waste generators. Thus the resource users and the waste generators will be paying a fee for the resources and services they are using. They can be summarized as water fee, wastewater discharge fee, effluent permit fee, air emission fees, solid waste disposal fee, landfill tax, and hazardous waste tax and product charge, Advance Disposal Fee (ADF), Ozone-Depleting Chemicals (ODC), government product charge and road user fees. The main purpose of charging a fee is to encourage the users and the polluters to reduce the amount of pollutants they are generating and disposing into the environment. These fees can also be named as “a pollution charge fee”, “user charge fee” or “product charge fee”. This chapter outlines the many existing waste fee models.

Can Polluting Firms Favor Regulation?

This paper investigates the production decisions of firms with asymmetric environmental damages, and how their profits are affected by environmental regulation. We demonstrate that emission fees entail a negative effect on firms’ profits, since they increase unit production costs. However, fees can also produce a positive effect for a relatively inefficient firm, given that environmental regulation mitigates its cost disadvantage. If such a disadvantage is sufficiently large, we show that the positive effect dominates, thus leading this firm to actually favor the introduction of environmental policy, while the relatively efficient firm opposes regulation. Furthermore, we show that such support can originate from polluting companies.

Economic Instruments for Sustainable Environmental Management

Environmental pollution has been continuously threatening the world. In the combat with environmental pollution problems, waste management authorities, in compliance with the “User Pays Principle-USP”, apply the “Polluter Pays Principle-3Ps” to the waste generators. Thus the resource users and the waste generators will be paying a fee for the resources and services they are using. They can be summarized as water fee, wastewater discharge fee, effluent permit fee, air emission fees, solid waste disposal fee, landfill tax, and hazardous waste tax and product charge, Advance Disposal Fee (ADF), Ozone-Depleting Chemicals (ODC), government product charge and road user fees. The main purpose of charging a fee is to encourage the users and the polluters to reduce the amount of pollutants they are generating and disposing into the environment. These fees can also be named as “a pollution charge fee”, “user charge fee” or “product charge fee”. This chapter outlines the many existing waste fee models.

Why do firms oppose entry-deterring policies? Environmental regulation and entry deterrence

This paper investigates the design of environmental regulation under different regimes: flexible and inflexible policies. We analyze under which settings strict emission fees can be used as an entry-deterring tool, and become socially optimal. Furthermore, we demonstrate that the incentives of the social planner and the incumbent firm are aligned regarding policy regimes ifentry can be easily deterred by setting a stringent regulation. Their incentives, however, can bemisaligned when entry becomes more costly to deter, leading the incumbent to actually preferenvironmental policies that attract entry.