Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/204387 
Year of Publication: 
2015
Series/Report no.: 
IFRO Working Paper No. 2015/07
Publisher: 
University of Copenhagen, Department of Food and Resource Economics (IFRO), Copenhagen
Abstract: 
Regulating externalities from the use of common resources is often hampered by the regulator's inability to accurately observe individual firms' resource use. Allocating resource use through taxes on aggregate use, which often can be observed, has been suggested (Segerson, 1988); however, these taxes are vulnerable to collusion and strategic behavior and they generate inefficient entry-exit incentives. To address these disadvantages, I suggest using a Montero (2008)-type auction mechanism to allocate licenses for unobserved use of common resources and to induce compliance with these licenses through an enforcement tax on the differences between aggregated licenses issued and observed aggregated resource use.
Subjects: 
incentive mechanisms
unobservable resource use
non-point emissions
truthful revelation
JEL: 
Q25
D62
D82
L51
Document Type: 
Working Paper

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