Dynamic Models of Pollution Penalties and Rewards with Time Delays

In cases of nonpoint pollution sources, the regulator can observe the total emission but unable to distinguish between the firms. The regulator then selects an environmental standard. If the total emission level is higher than the standard, then the firms are uniformly punished, and if lower, then uniformly awarded. This environmental regulation is added to n-firm dynamic oligopolies, and the asymptotical behavior of the corresponding dynamic systems is examined. Two particular models are considered with linear and hyperbolic price functions. Without delays, the equilibrium is always (locally) asymptotically stable. It is shown how the stability can be lost if time delays are introduced in the output quantities of the competitors as well as in the firms’ own output levels. Complete stability analysis is presented for the resulting one- and two-delay models including the derivations of stability thresholds, stability switching curves, and directions of the stability switches.

Reflections on 40 Years of Applied Economics Research on Agriculture and Water Quality

Reducing agricultural nonpoint pollution has been an environmental policy issue since the early 1980s. We discuss the evolution and results of federal and state policy, the contributions of applied economic research to improving the effectiveness and efficiency of water pollution control policies for agriculture, elements of policy reforms that are consistent with the Clean Water Act, and the outlook for needed policy innovation.