An Experimental Analysis of the Effects of Imperfect Compliance on Technology Adoption

Lidia Vidal‑Meliá; Carmen Arguedas; Eva Camacho-Cuena; José L. Zofío

doi:10.1007/s10640-021-00634-1

An Experimental Analysis of the Effects of Imperfect Compliance on Technology Adoption

Lidia Vidal‑Meliá^*, Carmen Arguedas, Eva Camacho-Cuena, José L. Zofío

^*Corresponding author for this work

Department of Technology and Operations Management

Research output: Contribution to journal › Article › Academic › peer-review

2 Citations (Scopus)

Abstract

We present the results of an experimental investigation on incentives to adopt cleaner abatement technologies in the presence of imperfect compliance. We consider two emission control instruments—emission taxes and tradable permits—as well as different combinations of the inspection probability and fine for non-compliance, which can result in full or weak enforcement scenarios. We review and qualify existing theoretical predictions in several ways and find the main result is that allowing for weak enforcement causes tax evasion, reductions in permit prices and lower adoption rates of cleaner abatement technologies. As a result, there are increases in aggregate emissions. Finally, treatments with tradable permits under weak enforcement encounter insufficient trading.

Original language	English
Pages (from-to)	425-451
Number of pages	27
Journal	Environmental and Resource Economics
Volume	81
Issue number	3
DOIs	https://doi.org/10.1007/s10640-021-00634-1
Publication status	Published - 2022

Bibliographical note

Funding Information:
Eva Camacho-Cuena is grateful for funding from the Universitat Jaume I under grant UJI-B2018-77, the Spanish Ministry of Science and Technology under grant RTI2018-096927-B-100, and the Generalitat Valenciana for the financial support under grant AICO/2018/036 and Cátedra de Nueva Transición Verde 9100/2021. Carmen Arguedas acknowledges financial support from the Spanish Ministry of Economy under research grant ECO2017-82449-P, and José L. Zofío under grant EIN2020-112260/AEI/10.13039/501100011033.

Funding Information:
Eva Camacho-Cuena is grateful for funding from the Universitat Jaume I under grant UJI-B2018-77, the Spanish Ministry of Science and Technology under grant RTI2018-096927-B-100, and the Generalitat Valenciana for the financial support under grant AICO/2018/036 and C?tedra de Nueva Transici?n Verde 9100/2021. Carmen Arguedas acknowledges financial support from the Spanish Ministry of Economy under research grant ECO2017-82449-P, and Jos? L. Zof?o under grant EIN2020-112260/AEI/10.13039/501100011033.

Publisher Copyright:
© 2021, The Author(s).

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Cite this

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title = "An Experimental Analysis of the Effects of Imperfect Compliance on Technology Adoption",

abstract = "We present the results of an experimental investigation on incentives to adopt cleaner abatement technologies in the presence of imperfect compliance. We consider two emission control instruments—emission taxes and tradable permits—as well as different combinations of the inspection probability and fine for non-compliance, which can result in full or weak enforcement scenarios. We review and qualify existing theoretical predictions in several ways and find the main result is that allowing for weak enforcement causes tax evasion, reductions in permit prices and lower adoption rates of cleaner abatement technologies. As a result, there are increases in aggregate emissions. Finally, treatments with tradable permits under weak enforcement encounter insufficient trading.",

author = "Lidia Vidal‑Meli{\'a} and Carmen Arguedas and Eva Camacho-Cuena and Zof{\'i}o, {Jos{\'e} L.}",

note = "Funding Information: Eva Camacho-Cuena is grateful for funding from the Universitat Jaume I under grant UJI-B2018-77, the Spanish Ministry of Science and Technology under grant RTI2018-096927-B-100, and the Generalitat Valenciana for the financial support under grant AICO/2018/036 and C{\'a}tedra de Nueva Transici{\'o}n Verde 9100/2021. Carmen Arguedas acknowledges financial support from the Spanish Ministry of Economy under research grant ECO2017-82449-P, and Jos{\'e} L. Zof{\'i}o under grant EIN2020-112260/AEI/10.13039/501100011033. Funding Information: Eva Camacho-Cuena is grateful for funding from the Universitat Jaume I under grant UJI-B2018-77, the Spanish Ministry of Science and Technology under grant RTI2018-096927-B-100, and the Generalitat Valenciana for the financial support under grant AICO/2018/036 and C?tedra de Nueva Transici?n Verde 9100/2021. Carmen Arguedas acknowledges financial support from the Spanish Ministry of Economy under research grant ECO2017-82449-P, and Jos? L. Zof?o under grant EIN2020-112260/AEI/10.13039/501100011033. Publisher Copyright: {\textcopyright} 2021, The Author(s).",

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AU - Zofío, José L.

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AB - We present the results of an experimental investigation on incentives to adopt cleaner abatement technologies in the presence of imperfect compliance. We consider two emission control instruments—emission taxes and tradable permits—as well as different combinations of the inspection probability and fine for non-compliance, which can result in full or weak enforcement scenarios. We review and qualify existing theoretical predictions in several ways and find the main result is that allowing for weak enforcement causes tax evasion, reductions in permit prices and lower adoption rates of cleaner abatement technologies. As a result, there are increases in aggregate emissions. Finally, treatments with tradable permits under weak enforcement encounter insufficient trading.

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An Experimental Analysis of the Effects of Imperfect Compliance on Technology Adoption

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