Abstract
Many articles have dealt with the advantages of spatially discriminating the abatement effort when the pollution is non-uniformly mixed. However, few authors have attempted to identify the impact of certain model parameters on the advantage of this discrimination. These parameters are the transfer coefficients, the parameters of the abatement cost function or the level of the quality standard. In this article, we studied the role of the slope of the environmental benefit function on the advantages of spatially discriminating pollution abatement efforts. It appears that the relative increase in the net social benefit between a uniform and a perfectly discriminated control is not affected by this slope. However, in the case of partial discrimination, a steeper benefit slope increases the optimal number of zones.
Highlights
We studied the role of the slope of the environmental benefit function on the advantages of spatially discriminating pollution abatement efforts
The American Clean Air Act of 1970 and, more precisely, the introduction of tradable permits to reduce air pollution in the USA, has encouraged economists to take a closer look at the spatial discrimination of pollution control instruments: prices differentiated according to the buyer and the seller or different exchange markets for tradable permits, and different tax rates depending on location for emission taxes
The first type aimed at reaching quality standards at a minimum cost (Atkinson & Lewis, 1974; Destandau & Nafi, 2009, 2010; Montgomery, 1972; O’Ryan, 2006), and the second type maximized the net social benefit, including total abatement costs and environmental damage, or the benefit of the pollution removed (Cabe & Herriges, 1990; Henderson, 1977; Howe & Lee, 1983; Kolstad, 1987; Krysiak & Schweitzer, 2010; Mendelsohn, 1986; Tietenberg, 1974; Wu & Babcock, 2001)
Summary
The American Clean Air Act of 1970 and, more precisely, the introduction of tradable permits to reduce air pollution in the USA, has encouraged economists to take a closer look at the spatial discrimination of pollution control instruments: prices differentiated according to the buyer and the seller or different exchange markets for tradable permits, and different tax rates depending on location for emission taxes. Two categories can be distinguished: those that compare uniform control (identical marginal abatement costs or effort) and perfectly discriminated control, and those that study the factors that have an impact on the optimal number of partially discriminated zones. Compare to the existing literature, the innovation of this study is triple: (1) first, the impact of the slope of the environmental benefit function is studied independently of the transfer coefficients, contrary to Kolstad (1987) and Williams III (2008); (2) second, the originality of this paper is to simultaneously study the discrimination by comparing perfect discrimination and uniform control, and by calculating the optimal number of zones in partial discrimination; and (3) third, in partial discrimination, in contrast to Krysiak and Schweitzer (2010), the combination {zone, effort per zone} will be determined endogenously using the methodology of Destandau and Point (2000).
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