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Comparing Environmental Policy Instruments in the Presence of Imperfect Compliance – A Case Study

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Abstract

In this paper, we aim to include rule making, implementation, monitoring and enforcement costs into the cost comparison of policy instruments. We use a simple partial equilibrium model and apply it to the textile industry. The model includes discrete abatement functions and costly monitoring and enforcement. The case study uses individual firm data to simulate the differences in abatement costs and compliance decisions between firms. We compare combinations of regulatory instruments (emission taxes, emission standards and technology standards) and enforcement instruments (criminal fines, civil fines and transaction offers). We show that the inclusion of information, monitoring and enforcement costs indeed alters the relative cost efficiency of the different instruments.

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Authors and Affiliations

  1. K.U.Leuven, Centre for Economic Studies, Naamsestraat 69, 3000, Leuven, Belgium

    Sandra Rousseau & Stef Proost

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  1. Sandra Rousseau
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  2. Stef Proost
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Correspondence to Sandra Rousseau.

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Rousseau, S., Proost, S. Comparing Environmental Policy Instruments in the Presence of Imperfect Compliance – A Case Study. Environ Resource Econ 32, 337–365 (2005). https://doi.org/10.1007/s10640-005-6646-6

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  • DOI: https://doi.org/10.1007/s10640-005-6646-6

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