CeDEx
Centre for Decision Research and Experimental Economics

CeDEx workshop - Lata Gangadharan (Monash University)

Date(s)
Wednesday 23rd May 2012 (14:00-15:00)
Description

Empowering Neighbors versus Imposing Regulations: An Experimental Analysis of Pollution Reduction Schemes

Abstract

This paper presents an experimental study of two mechanisms that influence incentives to reduce emissions that increase ambient pollution levels. In the formal mechanism individuals face a penalty if the group generates total pollution that exceeds a specified target, whereas in the informal mechanism individuals can choose to incur costs to punish each other after observing their individual emissions. We examine the effectiveness of these mechanisms, in isolation and in combination. The results suggest that the formal targeting mechanism is significantly more effective than informal peer punishment in reducing pollution and increasing efficiency.

Keywords: Ambient Target, Non-point source pollution, Peer-punishment, Transfer Coefficients

JEL Classification: C90, Q53, Q58

Centre for Decision Research and Experimental Economics

Sir Clive Granger Building
University of Nottingham
University Park
Nottingham, NG7 2RD

telephone: +44 (0)115 951 5458
Enquiries: jose.guinotsaporta@nottingham.ac.uk
Experiments: cedex@nottingham.ac.uk