Who Should Bear the Administrative Costs of an Emissions Tax
All environmental policies involve costs of implementation and management that are distinct from pollution sources’ abatement costs. In practice, regulators and sources usually share these administrative costs. We examine theoretically an optimal policy consisting of an emissions tax and the distribution of administrative costs between the government and regulated sources of pollution. Our focus is on the optimal distribution of administrative costs between polluters and the government and the optimal level of the emissions tax in relation to marginal pollution damage.