Abstract ：
A regulator can observe the total concentration of non-point source (NPS) pollution, however, cannot monitor individual emissions with low cost and high enough accuracy. This information asymmetry makes ad-equate standard instruments of environmental policy impossible. This paper constructs a simple Cournot competitive model and considers how much the ambient charge tax can control NPS pollution in a three-stage game. It is shown that the sub-game perfect equilibrium is obtained in which the optimal tax is determined to maximize the social welfare at the …rst stage; the pro…t maximizing …rms adopt the optimal abatement technologies at the second stage and the optimal productions at the third stage. It is also demonstrated that an increase of the ambient tax can decrease the total concentrations not only at the second stage but at the third stage as well.

Keywords : Non-point souce pollution, Ambient charges, Abatement technology, Three-stage game, Cournot competition, Sub-game perfect equilibrium