We study which policy tool and at what level a majority chooses in order to reduce activities with negativeexternalities. We consider three instruments: a rule, that sets an upper limit to the activity which produces thenegative externality, a quota that forces a proportional reduction of the activity, and a proportional tax on it.For all instruments the majority chooses levels which are too restrictive when the activity is performed mainlyby a small fraction of the population, and when costs for reducing activities or paying taxes are sufficientlyconvex. Also a majority may prefer an instrument different than what a social planner would choose; for instance a rule when the social planner would choose a tax.[...]
Regulation Versus Taxation
PASSARELLI, Francesco
2014
Abstract
We study which policy tool and at what level a majority chooses in order to reduce activities with negativeexternalities. We consider three instruments: a rule, that sets an upper limit to the activity which produces thenegative externality, a quota that forces a proportional reduction of the activity, and a proportional tax on it.For all instruments the majority chooses levels which are too restrictive when the activity is performed mainlyby a small fraction of the population, and when costs for reducing activities or paying taxes are sufficientlyconvex. Also a majority may prefer an instrument different than what a social planner would choose; for instance a rule when the social planner would choose a tax.[...]I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
