Abstract:
:This paper extends the voluntary-threat approach of Segerson and Wu (2006) to the case that the ambient level of nonpoint source pollution is stochastic. It is shown that when the random component is bounded from the above, fine-tuning the cutoff value of the tax payments avoids the actual imposition of the tax while the threat of such payments retains necessary incentive for the polluters to engage in abatements at the optimal level. If the random component is not bounded, the imposition of the tax cannot be completely avoided but the probability can be reduced by setting a higher cutoff value. It is also noted that the regulator has additional flexibility in randomizing the tax imposition but the randomization process has to be credible.
journal_name
J Environ Managejournal_title
Journal of environmental managementauthors
Li Ydoi
10.1016/j.jenvman.2013.05.047subject
Has Abstractpub_date
2013-11-15 00:00:00pages
69-72eissn
0301-4797issn
1095-8630pii
S0301-4797(13)00376-9journal_volume
129pub_type
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