Environmental voluntary behaviour and crowding-out effects: regulation or laissez-faire? |
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Authors: | Sverre Grepperud |
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Institution: | (1) Institute of Health Management and Health Economics, University of Oslo, PO 1089, 0317 Oslo, Norway |
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Abstract: | The purpose of this paper is to investigate what the consequences are if environmental regulation in terms of a price mechanism
(effluent charges) erodes moral motivation (crowding-out). The findings suggest that a regime relying on voluntarism can do
better than a mandatory regime depending on the number of individuals being intrinsically motivated, degree of moral motivation,
crowding effects, and whether or not ethical utilities are accounted for. The optimal tax scheme is a discriminatory one with
rates that differ across moral and non-moral individuals. This tax-scheme induces the first-best solution when social costs
are considered, while the same solution becomes unattainable for a social welfare function. The model provides a rationale
for why governments sometimes rely on voluntary effort.
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Keywords: | Voluntary abatement Moral behaviour Over-compliance |
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