Optimal Charges on River Effluent from Lumped and Distributed Sources

Environmental Modeling and Assessment, Vol. 2, pp. 177-189, 1997

Posted: 13 Jan 2010

See all articles by Alain Haurie

Alain Haurie

Ordecsys Switzerland

Jacek B. Krawczyk

Victoria University of Wellington

Date Written: 1997

Abstract

We propose a modeling framework for the design of a Pigouvian effluent tax, in an environmental management problem implicating several economic agents located in a river basin. The proposed charging system allows for the agents' geographical position relative to the river's sections, at which environmental standards are to be enforced, and takes into account the possible different market structures within which the agents are operating. In particular, we consider industrial agents competing on an oligopolistic market, and a set of farmers acting as price takers on a large market. A regional authority's goal is to induce agents to some sort of cooperation which would result in the satisfaction of the common environmental constraints. The economic process on one side, and the pollution transport and accumulation on the other, constitute two dynamic processes in two different time scales. As the economic process is much slower than the other process we can neglect the latter's transients and concentrate on the time invariant steady state solutions to the transportation equation. The model thus constructed has some non-cooperative game and optimal control problem's features with space being the ‘running’ variable.

Keywords: Pollution, Environment, Pigouvian effluent tax, Non-cooperative game, Optimal outcome

JEL Classification: O31, Q52, Q53

Suggested Citation

Haurie, Alain and Krawczyk, Jacek B., Optimal Charges on River Effluent from Lumped and Distributed Sources (1997). Environmental Modeling and Assessment, Vol. 2, pp. 177-189, 1997, Available at SSRN: https://ssrn.com/abstract=1535609

Alain Haurie

Ordecsys Switzerland ( email )

Place de l'Etrier 4
Chêne-Bougeries, 1224
Switzerland

Jacek B. Krawczyk (Contact Author)

Victoria University of Wellington ( email )

P.O. Box 600
Wellington 6001
New Zealand
+64-4-4721000 x 8553 (Phone)
+64-4-4955014 (Fax)

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