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The voluntary-threat approach to control nonpoint source pollution under uncertainty.
|Title||The voluntary-threat approach to control nonpoint source pollution under uncertainty.|
|Publication Type||Journal Article|
|Year of Publication||2013|
|Journal||Journal of environmental management|
|Date Published||2013 Nov 15|
This paper extends the voluntary-threat approach of Segerson and Wu (2006) to the case that the ambient level of nonpoint source pollution is stochastic. It is shown that when the random component is bounded from the above, fine-tuning the cutoff value of the tax payments avoids the actual imposition of the tax while the threat of such payments retains necessary incentive for the polluters to engage in abatements at the optimal level. If the random component is not bounded, the imposition of the tax cannot be completely avoided but the probability can be reduced by setting a higher cutoff value. It is also noted that the regulator has additional flexibility in randomizing the tax imposition but the randomization process has to be credible.
|Alternate Journal||J. Environ. Manage.|