پاداش های گروه و تحریم های فردی در سیاست های زیست محیطی
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|27670||2013||22 صفحه PDF||سفارش دهید||محاسبه نشده|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Resource and Energy Economics, Volume 35, Issue 1, January 2013, Pages 38–59
We examine an incentive scheme for a group of agents, where all agents are rewarded if the group meets its target. If the group does not meet its target, only the agents that meet their individual target are rewarded. This incentive scheme is applied in the UK Climate Change Agreements. There is only a difference in outcome between group and individual rewards if performance is stochastic. Group rewards lead to lower abatement than individual rewards if targets are realistic, i.e. if they have a high probability of being reached. Given the strictness of the targets, the agents prefer group rewards. The principal might want to use group rewards because they require less information, out of fairness concerns, or to combine strict targets with weak enforcement.
Consider the following incentive scheme: A group of agents takes on a group target, which is broken down into individual targets. If the group meets its target, everyone is rewarded, whether they met their individual targets or not. If the group does not meet its target, only the agents who met their individual targets are rewarded. This group rewards/individual sanctions (or group subsidies/individual taxes) scheme is applied in the UK Climate Change Agreements (CCAs). The UK government imposed a Climate Change Levy on industrial energy consumers in 2001. Energy-intensive firms could get an 80% discount on the levy if they signed a CCA, promising to improve their energy efficiency. The government signed agreements with the sectoral organisations, and the sectoral targets were translated into targets per firm. Every other year the agreement is evaluated. If the sector meets the target laid down in the agreement, all firms in the sector (even those who did not meet their target) continue to receive the discount for the next two years. If the sector does not meet the target, the individual firms’ emission-reduction performance is assessed. The firms that met their target continue to receive the discount. The firms that did not meet the target do not receive the discount for the next two years. The main purpose of our paper is to compare the equilibrium abatement efforts under group and individual rewards (both combined with individual sanctions). This subject has not been addressed in the literature before. Equilibrium abatement levels are different only if there is the possibility of individual overachievement under group rewards. Then one agent can benefit from another agent's overachievement. If each agent can set her emission level deterministically, all agents will just meet their individual targets with individual as well as with group rewards. However, it seems quite plausible to assume that an element of chance enters the translation from abatement effort to emission reduction. Firms cannot precisely predict the effect of their measures on their emissions. It depends on factors like market and economic conditions, the weather and the functioning of abatement equipment. There is some empirical evidence from BOD discharges in the US that emissions are stochastic, and that firms take this into account in their abatement decisions. Bandyopadhyay and Horowitz (2006) show that plants with a higher discharge variability have lower median discharges. Shimshack and Ward (2008) show that plants which statistically overcomply increase their overcompliance in response to an increased probability of sanctions, and the response is increasing in the randomness of the discharges. In the UK CCAs themselves there was also significant overcompliance.2 This could be seen as evidence in favour of the stochastic nature of emissions.3 As we will show, group rewards lead to lower abatement efforts if targets are realistic. Thus, one might wonder why a principal would want to use group rewards. One reason may be that group achievement is easier to observe than individual emission reduction, but this does not apply to the UK CCAs, as the sectoral organisations have the data on individual firms’ emission reductions and only collate these to calculate the sector's emission reduction. There might be, however, two other possible advantages of group rewards which also apply to the UK CCAs. The first advantage is fairness. When emissions are stochastic, individual rewards can be regarded as unfair. The second advantage of group rewards is that the principal can point to a set of targets that look quite ambitious. The paper is organized as follows. Section 2 reviews the literature. The CCAs are discussed in Section 3. Section 4 introduces the model and shows that with deterministic emission reduction, there is no difference between group and individual rewards. In Section 5 we address the difference between group and individual rewards for stochastic emissions. The concluding Section 6 discusses our results in the context of the CCAs.
نتیجه گیری انگلیسی
In this paper, we have examined the incentive system of group rewards and individual sanctions, as applied in the UK CCAs. Each firm has an individual energy saving target, but there are also sectoral targets. Every other year, the firms’ emission-reduction performance is evaluated. If the sector as a whole meets its target, all firms in the sector continue to receive the 80% discount on the Climate Change Levy for the next two years. If the sector does not meet its target, only the firms that met their individual targets continue to receive the discount. We have compared this system of group rewards to individual rewards. When the agents’ actions determine their emission reduction exactly, there is no difference between the two systems. There is a difference when emissions are stochastic, which is the realistic framework in the context of greenhouse gas abatement. With stochastic emissions, there are two opposing forces in principle: (i) individual abatement pays off less since the individual can free ride on the group performance, but (ii) the individual abatement contributes to the group performance (insurance). The overall influence on an agent's abatement under group rewards is negative if targets are realistic. When group rewards lead to less abatement than individual rewards, one might wonder why a principal would want to use group rewards. One reason may be that group emission reduction is easier to observe than individual emission reduction, or it is difficult to relate group emission reduction to individual emission reduction. This may well be the case for a team of workers within an organization. However, in the case of the UK CCAs, the sectoral organisations collect the data on individual firms’ emission reductions from the firms and collate these to calculate the sector's emission reduction. Thus the information on individual emission reduction has to be available in order to establish the group's emission reduction. This means that there is no informational reason for the government to rely on group rewards. We can see two other possible advantages of group rewards which also apply to the UK CCAs. The first advantage is fairness. When emissions are stochastic, individual rewards can be regarded as unfair. Two identical agents can abate exactly the amount, yet one is punished for underperformance while the other reaches her emission reduction target and is rewarded. Reward or punishment is down to luck. The group reward scheme is fairer, because one agent's accidental underachievement can be compensated by another agent's accidental overachievement. Thus the group-rewarding CCAs can be seen as a sort of group insurance scheme, reducing the probability that one firm is punished while the others are not. The second advantage of group rewards is that there is something in it for everyone, for the principal as well as for the agents. The principal (i.e. the UK government in the case of the CCAs) can point to a set of targets that look quite ambitious. However, the agents (i.e. the participating firms) know that even if they do not meet their individual target, they may still escape the fine. It seems that the system of group rewards in the UK CCAs arose more or less by accident from the decision to give the sectoral associations an active role in collating and relaying compliance date. The previous government came to realize the drawbacks of a group reward scheme, and was poised to replace it by individual rewards. However, the current government has decided to retain the group rewards.