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Determining the economic gains from regulation at the extensive and intensive margins

Goetz, Renan-Ulrich ; Schmid, Hansjörg ; Lehmann, Bernard

In: European Review of Agricultural Economics, 2006, vol. 33, no. 1, p. 1-30

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    Titre
    • Determining the economic gains from regulation at the extensive and intensive margins
    Auteur
    • Goetz, Renan-Ulrich. University of Girona, Girona, Spain
    • Schmid, Hansjörg. Kantonsspital Luzern, Luzern, Switzerland
    • Lehmann, Bernard. Swiss Federal Institute of Technology, Zürich, Switzerland
    Type de document
    • Postprint
    Langue
    • Anglais
    Publié dans
    • European Review of Agricultural Economics, 2006, vol. 33, no. 1, p. 1-30. Oxford University Press
    Autre version électronique
    Identifiant OAI-PMH
    • oai:doc.rero.ch:293391
    Summary
    Among the second-best approaches for the regulation of pollution, little attention has been paid to the distorting effect of intensive margin policies on the extensive margin. This article shows, within a dynamic framework, that regulation of the intensive margin has to be complemented by regulation of the extensive margin. Depending on the elasticity of the pollution function with respect to nitrogen use, the appropriate regulation at the extensive margin is zero, a tax or a subsidy. We show empirically that combining a nitrogen tax with land-use taxes is about 18 per cent more cost efficient than a nitrogen tax alone and 58 per cent more efficient than off-site abatement in the form of groundwater treatment