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NEP: New Economics Papers
Agricultural Economics
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Edited by: Angelo Zago
Universita degli Studi di Verona
Date: 2005-03-06
Papers: 2
This document is in the public domain, feel free to circulate it.
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In this issue we have:
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1. Pollution standards, costly monitoring and fines
Arguedas,Carmen
2. Boutique Fuels and Market Power
Ujjayant Chakravorty; C?line Nauges
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1. Pollution standards, costly monitoring and fines
Arguedas,Carmen (Tilburg University, Center for Economic
Research)
We investigate the features of optimal regulatory policies
composed of pollution standards and probabilities of inspection,
where fines for non-compliance depend not only on the degree of
violation but alson on nongravity factors. We show that optimal
policies can induce either compliance or noncompliance with the
standards, the latter being more plausible when monitoring costs
are large and, surprisingly, when gravity-based fines are large.
Also, both tghe convexity of the sanctions and the level of the
non-gravity-based penalties play a key role as to whether optimal
policies induce noncompliance.
JEL: D82 K32 K42 L51
Date: 2005
URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:20059&r=agr
2. Boutique Fuels and Market Power
Ujjayant Chakravorty
C?line Nauges
The US Clean Air Act allows individual states to implement their
own clean fuel programs to address local or regional air quality
concerns. These regulations have led to a proliferation of fuel
blends known as ?boutique fuels.? For each of the three
grades of gasoline, more than 15 types of boutique fuels are
currently in use, leading to about 45 different fuel blends in
use nationally. These fuels are costly to produce, but they also
segment the market and increase the market power of refiners.
Using measures that differentiate gasoline regulation in a given
state from those in neighboring states, we find that both cost
and market segmentation significantly affect wholesale gasoline
prices. In particular, the greater the regulatory ?distance?
between a state and its neighboring states, the higher the
wholesale price in that state. Simulations suggest that for some
states regulating a single boutique fuel nationally may lead to a
counter-intuitive outcome: gasoline prices may decline, even
though a larger share of their market will be under regulation.
Date: 2005-02
URL: http://d.repec.org/n?u=RePEc:emo:wp2003:0511&r=agr
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