Alessio D'Amato - Academia.edu (original) (raw)
Papers by Alessio D'Amato
This paper deals with the issue of whether the power of allocating tradeable emission permits wit... more This paper deals with the issue of whether the power of allocating tradeable emission permits within a federal system (or an economic union) should be centralized or delegated to the single states/nations. To this end, we develop a simple two stage game played by two governments and their respective industries producing a homogeneous output that is sold in a third country. We show that when emission permits are traded competitively at a federal (or economic union) level, a decentralized emission trading system (DETS) would result in a lower than optimal price of permits, as well as in an aggregate emission target which is larger than the socially optimal target that would arise under a centralized system (CETS). This result partly hinges on standard international externality considerations; on the other hand, we find a new "channel" through which decentralized permits distribution could lead to distortions: under a DETS, national governments play a Cournot game, and choose the amount of allowances to be distributed to domestic firms without accounting for the spillover such distribution generates on the other country via the price of allowances.
This paper deals with the issue of whether the power of allocating tradeable emission permits wit... more This paper deals with the issue of whether the power of allocating tradeable emission permits within a federal system (or an economic union) should be centralized or delegated to the single states/nations. To this end, we develop a simple two stage game played by two governments and their respective industries producing a homogeneous output that is sold in a third country. We show that when emission permits are traded competitively at a federal (or economic union) level, a decentralized emission trading system (DETS) would result in a lower than optimal price of permits, as well as in an aggregate emission target which is larger than the socially optimal target that would arise under a centralized system (CETS). This result partly hinges on standard international externality considerations; on the other hand, we find a new ”channel” through which decentralized permits distribution could lead to distortions: under a DETS, national governments play a Cournot game, and choose the amoun...
Economics Bulletin
In this note we extend the analysis developed by Helm (2003) and consider an international emissi... more In this note we extend the analysis developed by Helm (2003) and consider an international emissions trading system (ETS) where the initial allocation of tradeable permits may be chosen non cooperatively, as in Helm, or cooperatively. We first derive conditions guaranteeing that polluting firms located in a given country benefit from an increase in the received amount of emission permits; then, we compare the countries' allocation choices under both a non-cooperative (decentralized) and a cooperative (centralized) regime, showing that, both in each country and on aggregate decentralization leads to a lower environmental quality than the "first best" that would arise under a centralized ETS. As a result, the equilibrium permits price in the latter case is higher than under decentralization. We show that this conclusions do not depend only on the presence of transboundary pollution, but also on the international dimension of emissions trading. Finally, although centraliz...
This paper suggests a possible theoretical rationale for some pieces of evidence referred to the ... more This paper suggests a possible theoretical rationale for some pieces of evidence referred to the EU emissions trading system. To this end, we develop a three stage game played by two governments, their respective polluting industries and the environmental authorities taking part to an economic union.
We use a multi-task principal-agent model with moral hazard to study environmental regulation of ... more We use a multi-task principal-agent model with moral hazard to study environmental regulation of a private agent by an EPA that can also allocate its budget to an alternative project with environmental benefits.
This work extends Lazear and Rosen's seminal paper to evaluate the performance of rank order tour... more This work extends Lazear and Rosen's seminal paper to evaluate the performance of rank order tournaments when agents perform multiple tasks and the principal chooses, together with the prize spread, the weights assigned to each task in determining aggregate performance of each agent. All essential results of one−dimensional tournaments generalize to a multi−dimensional setting. However, the relative performance of tournaments and linear piece rates is shown to also depend on the covariance between measurement errors.
This paper investigates if and how illegal disposal of waste is affected by the decentralized was... more This paper investigates if and how illegal disposal of waste is affected by the decentralized waste management commitment of local governments and by enforcement policies. On the basis of a panel dataset at the Italian provincial level that originally integrates waste, economic, policy and enforcement data, our empirical analysis presents two main insights. First, a more diffuse commitment towards incentive based waste policy tends to increase illegal disposal. Second, a non-linear bell shaped relationship exists between enforcement and illegal disposal, namely deterrence only results after a (relatively high) level of controls is implemented.
Resource and Energy Economics, 2015
SSRN Electronic Journal, 2000
Resource and Energy Economics, 2015
ABSTRACT Waste management and disposal are influenced by socio-economic, institutional and policy... more ABSTRACT Waste management and disposal are influenced by socio-economic, institutional and policy factors that possess idiosyncratic features in regional settings. The pertinent role of organized crime is a largely unexplored factor. Crime organizations such as the mafia are known to collude with local institutions to control waste markets. As a result, legal forms of waste disposal and socially preferable management options are often undermined primarily through an influence on policy enforcement. Given its high regional heterogeneity and local ‘waste crises’, Italy provides a compelling case for the study of crime's effects on local waste performance. Panel econometric analyses show that a sorted collection of recyclable waste and legal forms of waste disposal are lower when the mafia's effect on the actions of local governments is more intense.
Resource and Energy Economics, 2015
G. Cainelli et al. / Resource and Energy Economics 39 (2015) 53-67 JEL classification: D22 Q53 Q55
Journal of Integrative Environmental Sciences, 2014
The aim of the paper is to outline the best environmental policy design when the prevention and/ ... more The aim of the paper is to outline the best environmental policy design when the prevention and/ or removal of the socially harmful technology lock-in effect is the target. Relying on Arthur [1] seminal paper, we point out that the well established result according to which incentive based instruments are to be preferred to the command and control ones, may be contradicted and even subverted when technology adoption is a concern. Command and control policies might be the only instrument ensuring the economy not to be locked-in on an unsustainable path. Our setting suggests a reason why environmental policy could be ill-designed when the "chance" for lock-in to take place is overlooked and draws attention on the importance (indeed crucial relevance) of knowing the "true"ranking among technologies for avoiding the dominance of an inferior one.
ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, 2013
Journal of Regulatory Economics, 2011
This paper addresses the issue of whether the powers of monitoring compliance and allocating trad... more This paper addresses the issue of whether the powers of monitoring compliance and allocating tradeable emissions allowances within a federation of countries should be appointed to a unique federal regulator or decentralized to several local regulators. To this end, we develop a two stage game played by environmental regulator(s) and the polluting industries of two countries. Regulator(s) choose the amount of emission allowances to be issued and set the level of monitoring effort to achieve full compliance, while regulated firms choose actual emissions and the number of permits to be held. We identify various, possibly conflicting, spillovers among states in a decentralized setting. We show that cost advantage in favor of local regulators is not sufficient to justify decentralization. Nevertheless, cost differential in monitoring violations can imply lower emissions and greater welfare under a decentralized institutional setting than under a centralized one. However, while a better environmental quality under decentralization is a sufficient condition for higher welfare under the same regime, it is not also a necessary condition.
Environmental Economics and Policy Studies, 2012
ABSTRACT We contribute to the theoretical and empirical literature on waste trade, with a focus o... more ABSTRACT We contribute to the theoretical and empirical literature on waste trade, with a focus on the secondhand market of plastic materials. To do this, we take two main steps: we first model a two-country setting with an exporting and an importing country, to derive testable predictions on how their main economic, policy and institutional features are expected to affect waste flows across countries. Then, we rely on a negative binomial regression model to test our theoretical results using data on international trade of polyethylene waste. Empirical results do not reject theoretical predictions, although some exceptions arise. A first striking result is that exporting prices do not seem to matter in export flows. Also, relying more on landfilling and recycling negatively affects exports, suggesting complex interactions among waste management and export patterns. Finally, we conclude that legal rights enforcement in exporting countries does not affect waste trade. A “pollution haven” hypothesis is however indirectly suggested by the negative link between wages in the importing countries and the amount of exported waste.
Most tradable permit regimes have ignored the role of emission allowance taxation whereas the OEC... more Most tradable permit regimes have ignored the role of emission allowance taxation whereas the OECD and the European Union have emphasized the need for further investigation of the related efficiency and effectiveness consequences. The aim of our paper is to take a first step in this direction. We illustrate a theoretical model featuring I representative competitive firms/countries. Our theoretical results show that accounting for permit taxation implies a distortion in the equilibrium price as well as an impact on emissions distribution across countries. The specific features of these distortions are then investigated through a Computable General Equilibrium model in which several options for taxes on net sellers' permit revenues and defiscalization of net buyers' permit costs are simulated. Welfare analysis is performed, suggesting that the design of permit taxation is relevant in determining how welfare gains and losses are distributed across countries.
This paper verifies the robustness of Dixit's claim that common agency problems in the publi... more This paper verifies the robustness of Dixit's claim that common agency problems in the public sector can be solved by restrictions on the incentive schemes that government agencies can develop for the subordinates of other departments. In our model, the outside principal (for instance, an environmental agency) offers side payments to the hierarchical superior of a public servant. As suggested by Dixit, the side payment is based only on the output that is of direct relevance for the outside principal (for instance, environmental quality). The hierarchical superior, however, can impose an enforceable effort allocation. We show that the outside principal will bribe the hierarchical superior to impose a zero effort level in the task that constitutes the core mission of his department, unless there exist both lower and upper limits to the transfers that can be made. Thus, without exogenous restrictions on side payments, common agency will lead to a collapse of the division of labor within government.
We consider environmental regulation of n risk-averse, multiple pollutant firms. We develop a "ya... more We consider environmental regulation of n risk-averse, multiple pollutant firms. We develop a "yardstick competition" scheme where the regulatory scheme depends on the difference between a firm's "aggregate" performance and the average "aggregate" performance of the industry. Whether this instruments dominates Pigovian taxation depends on the complete structure of the covariance matrix of the "common" random terms in measured pollution. Moreover, if the number of firms is large enough, the "yardstick scheme" is always superior to Pigovian taxation. This analysis also provides new arguments in favor of strict liability rather than negligence liability as regulatory tool.
This paper deals with the issue of whether the power of allocating tradeable emission permits wit... more This paper deals with the issue of whether the power of allocating tradeable emission permits within a federal system (or an economic union) should be centralized or delegated to the single states/nations. To this end, we develop a simple two stage game played by two governments and their respective industries producing a homogeneous output that is sold in a third country. We show that when emission permits are traded competitively at a federal (or economic union) level, a decentralized emission trading system (DETS) would result in a lower than optimal price of permits, as well as in an aggregate emission target which is larger than the socially optimal target that would arise under a centralized system (CETS). This result partly hinges on standard international externality considerations; on the other hand, we find a new "channel" through which decentralized permits distribution could lead to distortions: under a DETS, national governments play a Cournot game, and choose the amount of allowances to be distributed to domestic firms without accounting for the spillover such distribution generates on the other country via the price of allowances.
This paper deals with the issue of whether the power of allocating tradeable emission permits wit... more This paper deals with the issue of whether the power of allocating tradeable emission permits within a federal system (or an economic union) should be centralized or delegated to the single states/nations. To this end, we develop a simple two stage game played by two governments and their respective industries producing a homogeneous output that is sold in a third country. We show that when emission permits are traded competitively at a federal (or economic union) level, a decentralized emission trading system (DETS) would result in a lower than optimal price of permits, as well as in an aggregate emission target which is larger than the socially optimal target that would arise under a centralized system (CETS). This result partly hinges on standard international externality considerations; on the other hand, we find a new ”channel” through which decentralized permits distribution could lead to distortions: under a DETS, national governments play a Cournot game, and choose the amoun...
Economics Bulletin
In this note we extend the analysis developed by Helm (2003) and consider an international emissi... more In this note we extend the analysis developed by Helm (2003) and consider an international emissions trading system (ETS) where the initial allocation of tradeable permits may be chosen non cooperatively, as in Helm, or cooperatively. We first derive conditions guaranteeing that polluting firms located in a given country benefit from an increase in the received amount of emission permits; then, we compare the countries' allocation choices under both a non-cooperative (decentralized) and a cooperative (centralized) regime, showing that, both in each country and on aggregate decentralization leads to a lower environmental quality than the "first best" that would arise under a centralized ETS. As a result, the equilibrium permits price in the latter case is higher than under decentralization. We show that this conclusions do not depend only on the presence of transboundary pollution, but also on the international dimension of emissions trading. Finally, although centraliz...
This paper suggests a possible theoretical rationale for some pieces of evidence referred to the ... more This paper suggests a possible theoretical rationale for some pieces of evidence referred to the EU emissions trading system. To this end, we develop a three stage game played by two governments, their respective polluting industries and the environmental authorities taking part to an economic union.
We use a multi-task principal-agent model with moral hazard to study environmental regulation of ... more We use a multi-task principal-agent model with moral hazard to study environmental regulation of a private agent by an EPA that can also allocate its budget to an alternative project with environmental benefits.
This work extends Lazear and Rosen's seminal paper to evaluate the performance of rank order tour... more This work extends Lazear and Rosen's seminal paper to evaluate the performance of rank order tournaments when agents perform multiple tasks and the principal chooses, together with the prize spread, the weights assigned to each task in determining aggregate performance of each agent. All essential results of one−dimensional tournaments generalize to a multi−dimensional setting. However, the relative performance of tournaments and linear piece rates is shown to also depend on the covariance between measurement errors.
This paper investigates if and how illegal disposal of waste is affected by the decentralized was... more This paper investigates if and how illegal disposal of waste is affected by the decentralized waste management commitment of local governments and by enforcement policies. On the basis of a panel dataset at the Italian provincial level that originally integrates waste, economic, policy and enforcement data, our empirical analysis presents two main insights. First, a more diffuse commitment towards incentive based waste policy tends to increase illegal disposal. Second, a non-linear bell shaped relationship exists between enforcement and illegal disposal, namely deterrence only results after a (relatively high) level of controls is implemented.
Resource and Energy Economics, 2015
SSRN Electronic Journal, 2000
Resource and Energy Economics, 2015
ABSTRACT Waste management and disposal are influenced by socio-economic, institutional and policy... more ABSTRACT Waste management and disposal are influenced by socio-economic, institutional and policy factors that possess idiosyncratic features in regional settings. The pertinent role of organized crime is a largely unexplored factor. Crime organizations such as the mafia are known to collude with local institutions to control waste markets. As a result, legal forms of waste disposal and socially preferable management options are often undermined primarily through an influence on policy enforcement. Given its high regional heterogeneity and local ‘waste crises’, Italy provides a compelling case for the study of crime's effects on local waste performance. Panel econometric analyses show that a sorted collection of recyclable waste and legal forms of waste disposal are lower when the mafia's effect on the actions of local governments is more intense.
Resource and Energy Economics, 2015
G. Cainelli et al. / Resource and Energy Economics 39 (2015) 53-67 JEL classification: D22 Q53 Q55
Journal of Integrative Environmental Sciences, 2014
The aim of the paper is to outline the best environmental policy design when the prevention and/ ... more The aim of the paper is to outline the best environmental policy design when the prevention and/ or removal of the socially harmful technology lock-in effect is the target. Relying on Arthur [1] seminal paper, we point out that the well established result according to which incentive based instruments are to be preferred to the command and control ones, may be contradicted and even subverted when technology adoption is a concern. Command and control policies might be the only instrument ensuring the economy not to be locked-in on an unsustainable path. Our setting suggests a reason why environmental policy could be ill-designed when the "chance" for lock-in to take place is overlooked and draws attention on the importance (indeed crucial relevance) of knowing the "true"ranking among technologies for avoiding the dominance of an inferior one.
ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, 2013
Journal of Regulatory Economics, 2011
This paper addresses the issue of whether the powers of monitoring compliance and allocating trad... more This paper addresses the issue of whether the powers of monitoring compliance and allocating tradeable emissions allowances within a federation of countries should be appointed to a unique federal regulator or decentralized to several local regulators. To this end, we develop a two stage game played by environmental regulator(s) and the polluting industries of two countries. Regulator(s) choose the amount of emission allowances to be issued and set the level of monitoring effort to achieve full compliance, while regulated firms choose actual emissions and the number of permits to be held. We identify various, possibly conflicting, spillovers among states in a decentralized setting. We show that cost advantage in favor of local regulators is not sufficient to justify decentralization. Nevertheless, cost differential in monitoring violations can imply lower emissions and greater welfare under a decentralized institutional setting than under a centralized one. However, while a better environmental quality under decentralization is a sufficient condition for higher welfare under the same regime, it is not also a necessary condition.
Environmental Economics and Policy Studies, 2012
ABSTRACT We contribute to the theoretical and empirical literature on waste trade, with a focus o... more ABSTRACT We contribute to the theoretical and empirical literature on waste trade, with a focus on the secondhand market of plastic materials. To do this, we take two main steps: we first model a two-country setting with an exporting and an importing country, to derive testable predictions on how their main economic, policy and institutional features are expected to affect waste flows across countries. Then, we rely on a negative binomial regression model to test our theoretical results using data on international trade of polyethylene waste. Empirical results do not reject theoretical predictions, although some exceptions arise. A first striking result is that exporting prices do not seem to matter in export flows. Also, relying more on landfilling and recycling negatively affects exports, suggesting complex interactions among waste management and export patterns. Finally, we conclude that legal rights enforcement in exporting countries does not affect waste trade. A “pollution haven” hypothesis is however indirectly suggested by the negative link between wages in the importing countries and the amount of exported waste.
Most tradable permit regimes have ignored the role of emission allowance taxation whereas the OEC... more Most tradable permit regimes have ignored the role of emission allowance taxation whereas the OECD and the European Union have emphasized the need for further investigation of the related efficiency and effectiveness consequences. The aim of our paper is to take a first step in this direction. We illustrate a theoretical model featuring I representative competitive firms/countries. Our theoretical results show that accounting for permit taxation implies a distortion in the equilibrium price as well as an impact on emissions distribution across countries. The specific features of these distortions are then investigated through a Computable General Equilibrium model in which several options for taxes on net sellers' permit revenues and defiscalization of net buyers' permit costs are simulated. Welfare analysis is performed, suggesting that the design of permit taxation is relevant in determining how welfare gains and losses are distributed across countries.
This paper verifies the robustness of Dixit's claim that common agency problems in the publi... more This paper verifies the robustness of Dixit's claim that common agency problems in the public sector can be solved by restrictions on the incentive schemes that government agencies can develop for the subordinates of other departments. In our model, the outside principal (for instance, an environmental agency) offers side payments to the hierarchical superior of a public servant. As suggested by Dixit, the side payment is based only on the output that is of direct relevance for the outside principal (for instance, environmental quality). The hierarchical superior, however, can impose an enforceable effort allocation. We show that the outside principal will bribe the hierarchical superior to impose a zero effort level in the task that constitutes the core mission of his department, unless there exist both lower and upper limits to the transfers that can be made. Thus, without exogenous restrictions on side payments, common agency will lead to a collapse of the division of labor within government.
We consider environmental regulation of n risk-averse, multiple pollutant firms. We develop a "ya... more We consider environmental regulation of n risk-averse, multiple pollutant firms. We develop a "yardstick competition" scheme where the regulatory scheme depends on the difference between a firm's "aggregate" performance and the average "aggregate" performance of the industry. Whether this instruments dominates Pigovian taxation depends on the complete structure of the covariance matrix of the "common" random terms in measured pollution. Moreover, if the number of firms is large enough, the "yardstick scheme" is always superior to Pigovian taxation. This analysis also provides new arguments in favor of strict liability rather than negligence liability as regulatory tool.