"Dynamic aspects of effluent taxation under uncertainty" by James J. Opaluch
 

Dynamic aspects of effluent taxation under uncertainty

Document Type

Article

Date of Original Version

1-1-1984

Abstract

The optimal adjustment process for an effluent charge is derived when the firm's response to the charge is uncertain. The optimal process is shown to exhibit the dual effects of caution and probing. Because of uncertainty, society should be risk averse or cautious when setting the charge. However, because of the possibility of generating information for improved future control, this caution is balanced by the incentive to probe for additional information. Finally, if the uncertain parameters of the firm's response function are nonautonomous, their change over time must be explicitly considered to avoid bias in estimation. © 1984.

Publication Title, e.g., Journal

Journal of Environmental Economics and Management

Volume

11

Issue

1

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