Abstract
Anyone who has visited Mexico City or Jakarta or Santiago knows that pollution is part of everyday life in the developing world. Yet economics textbooks have been prescribing solutions to the problem of pollution for at least half a century. One reason why the textbook solution -- levying an emissions fee on the polluter -- has not been applied is that it requires the government to monitor emissions, something that may not be feasible in many countries. In fact, most pollution control policies in place employ indirect instruments -- those which tax or regulate activities associated with emissions -- rather than neutrally putting a brake on emissions. In this chapter, we argue that such policies economize on scarce capacity in monitoring and enforcement, but generally leave room for improvement.
The authors thank C. Ballard, M. Cropper, G. Hughes, conference and seminar participants, as well as two anonymous referees.
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Eskeland, G.S., Devarajan, S. (1995). Taxing Bads by Taxing Goods: Towards Efficient Pollution Control with Presumptive Charges. In: Bovenberg, L., Cnossen, S. (eds) Public Economics and the Environment in an Imperfect World. Natural Resource Management and Policy, vol 8. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-0661-0_4
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