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Regulation Versus Taxation
[report]
2010
unpublished
We study which policy tool and at what level a majority chooses in order to reduce activities with negative externalities. We consider three instruments: a rule, that sets an upper limit to the activity which produces the negative 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 mainly by a small fraction of the population, and when
doi:10.3386/w16413
fatcat:7ilslhis7bdojgswbkssmthbz4