Voluntary-threat Approaches To Reduce Ambient Water Pollution

Abstract

This article considers the regulation of nonpoint source water pollution through the use of a voluntary-threat approach, which allows a polluter group to meet a standard voluntarily but imposes an ambient tax upon noncompliance. In particular, we develop an "endogenous" voluntary-threat approach that can be parameterized to induce compliance as a unique subgame perfect Nash equilibrium and eliminate zero-abatement equilibria. Experimental evidence on the proposed approach as well as the "exogenous" approach of Segerson and Wu (2006) suggests that the severity of the threatened tax and the opportunity for communication are critical in determining policy outcomes.

Publisher

Oxford University Press

Publication Date

7-1-2010

Publication Title

American Journal of Agricultural Economics

Department

Environmental Studies

Document Type

Article

DOI

https://dx.doi.org/10.1093/ajae/aaq042

Keywords

Ambient tax, Laboratory experiments, Nonpoint source pollution control, Voluntary-threat approach

Language

English

Format

text

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