Program > Program by speaker > Takuro Miyamoto

Does an Optimal Voluntary Approach Flexibly Control Emissions from Heterogeneous Firms?
Miyamoto Takuro  1@  , Ryo Ishida  2@  
1 : Waseda University
2 : Ministry of Finance

We theoretically examine the potential of a voluntary policy (or quasi-regulation in other contexts than environmental issues) for emission pollution from a large number of heterogeneous firms under an asymmetric information case. Particularly, we focus on the performance and flexibility of the optimal voluntary policy as an alternative to inflexible mandatory regulations. Regardless of the type of heterogeneity, heterogeneous emission abatement technology level or emission size, the optimal voluntary policy performs better than the mandatory policy, and the optimal voluntary policy performs strictly better if there is non-zero probability that the regulator fails to introduce the mandatory policy. However, the perfectly flexible voluntary policy or different abatement (or emission) target for different types of firms is never optimal, and the inflexible voluntary policy, a uniform target for all types, is likely optimal if the majority of polluting firms has high abatement costs or a large emission size.


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