Regulating altruistic agents

Heyes, Anthony and Kapur, Sandeep (2011) Regulating altruistic agents. Canadian Journal of Economics, 44 (1). pp. 227-246. ISSN 0008-4085

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Altruism or ‘regard for others’ can encourage self-restraint among generators of negative externalities, thereby mitigating the externality problem. We explore how introducing impure altruism into standard regulatory settings alters regulatory prescriptions. The optimal calibration of both quantitative controls and externality taxes is affected. It also leads to surprising results on the comparative performance of instruments. Under quantity-based regulation, welfare is increasing in the propensity for altruism in the population; under price-based regulation, the relationship is non-monotonic. Price-based regulation is preferred when the population is either predominantly altruistic or predominantly selfish; quantity-based regulation is preferred for cases in between.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Economics
Subjects: H Social Sciences > HB Economic theory. Demography
Depositing User: Catrina Hey
Date Deposited: 11 Oct 2013 09:49
Last Modified: 11 Oct 2013 09:49
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