Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/154969 
Year of Publication: 
1999
Series/Report no.: 
Nota di Lavoro No. 15.1999
Publisher: 
Fondazione Eni Enrico Mattei (FEEM), Milano
Abstract: 
We compare taxes and quotas when firms and the regulator have asymmetric information about abatement costs. Damages are caused by a stock pollutant. Uncertainty enters multiplicatively, i.e. it affects the slope rather than the intercept of abatement costs. We calibrate the model using cost and damage estimates of greenhouse gases. As with additive uncertainty, taxes dominate quotas. The advantage of taxes is much greater with mulitiplicative, compared to additive uncertainty.
Subjects: 
Pollution control
asymmetric information
taxes and quotas
stochastic control
global warming
multiplicative disturbances
JEL: 
H21
Q28
Document Type: 
Working Paper

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