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Dynamic Pollution Regulation

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  • Biglaiser, Gary
  • Horowitz, John K
  • Quiggin, John
Abstract
This paper examines pollution regulation in a dynamic setting with complete information. We show that tradeable pollution permits may not achieve the social optimum even when the permit market is perfectly competitive. The reason is that the optimal tradeable permits regulation will typically be time inconsistent. We then show that pollution taxes can achieve the first best and are time consistent. Copyright 1995 by Kluwer Academic Publishers

Suggested Citation

  • Biglaiser, Gary & Horowitz, John K & Quiggin, John, 1995. "Dynamic Pollution Regulation," Journal of Regulatory Economics, Springer, vol. 8(1), pages 33-44, July.
  • Handle: RePEc:kap:regeco:v:8:y:1995:i:1:p:33-44
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