Journal of Regulatory Economics

, Volume 44, Issue 1, pp 53–79 | Cite as

Who should bear the administrative costs of an emissions tax?

  • John K. StranlundEmail author
  • Carlos A. Chávez
Original Article


All environmental policies involve costs of implementation and management that are distinct from pollution sources’ abatement costs. In practice, regulators and sources usually share these administrative costs. We examine theoretically an optimal policy consisting of an emissions tax and the distribution of administrative costs between the government and regulated sources of pollution. Our focus is on the optimal distribution of administrative costs between polluters and the government and the optimal level of the emissions tax in relation to marginal pollution damage. We demonstrate how the policy variables affect aggregate equilibrium administrative costs and show that these effects are generally indeterminate, as is the effect of the distribution of administrative costs on aggregate emissions. Consequently, the optimal sharing of administrative costs and whether the optimal emissions tax is higher or lower than marginal damage depend on specific contexts.


Emission taxes Pigouvian taxes Administrative costs  Pollution control 

JEL Classification

L51 Q58 



This research has been supported by a grant from Conicyt-Chile, under project Fondecyt No. 1110073, and Fondecyt International Cooperation. Additional funding for this research was provided by the Cooperative State Research Extension, Education Service, U. S. Department of Agriculture, Massachusetts Agricultural Experiment Station under Project No. MAS00965. We would like to thank an anonymous referee of this journal for their helpful comments and suggestions.


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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Department of Resource EconomicsUniversity of Massachusetts-AmherstAmherstUSA
  2. 2.Departamento de Economía, Research Nucleus on Environmental and Natural Resource Economics, and Interdisciplinary Center for Aquaculture Research (INCAR)Universidad de ConcepciónConcepción, Biobío RegionChile

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