Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81932
Authors: 
Baumann, Florian
Friehe, Tim
Year of Publication: 
2013
Series/Report no.: 
DICE Discussion Paper 106
Abstract: 
This paper examines the consequences of an increase in the expected fine for non-compliance with an environmental design standard for an industry with Cournot competition and free entry. Our analysis is quite timely, given recent policy proposals to raise environmental fines. We describe the range in which changes in the environmental fine have no consequences, and detail the various other effects that emerge. It is established that an increase in the expected fine for non-compliance may have adverse welfare consequences, while it always serves the purpose of inducing a greater share of firms to adopt the prescribed technology.
Subjects: 
pollution
regulation
design standard
endogenous number of firms
environmental fines
SEC
JEL: 
D62
Q55
Q58
ISBN: 
978-3-86304-105-2
Document Type: 
Working Paper

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