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Transaction Costs And Agricultural Nonpoint-Source Water Pollution Control Policies

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  • Smith, Rodney B.W.
  • Tomasi, Theodore D.
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    Abstract

    Mechanism design theory is used to develop the properties of optimal pollution control incentive schemes in the presence of adverse selection, moral hazard, and transaction costs. The model presented here shows (a) with no deadweight costs (transaction costs) , first-best allocations are always possible; (b) in the presence of transaction costs (caused by raising taxes), only second-best allocations are feasible; and (c) the conditions under which the optimal incentive scheme implementing second-best allocations will be a nonlinear tax, a standard(s), or a combination of both taxes and standard(s).

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    File URL: http://purl.umn.edu/30768
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    Bibliographic Info

    Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

    Volume (Year): 20 (1995)
    Issue (Month): 02 (December)
    Pages:

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    Handle: RePEc:ags:jlaare:30768

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    Web page: http://waeaonline.org/
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    Related research

    Keywords: Environmental Economics and Policy;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Lee, Dwight R. & Misiolek, Walter S., 1986. "Substituting pollution taxation for general taxation: Some implications for efficiency in pollutions taxation," Journal of Environmental Economics and Management, Elsevier, vol. 13(4), pages 338-347, December.
    2. Guesnerie, Roger & Laffont, Jean-Jacques, 1984. "A complete solution to a class of principal-agent problems with an application to the control of a self-managed firm," Journal of Public Economics, Elsevier, vol. 25(3), pages 329-369, December.
    3. Dasgupta, Partha S & Hammond, Peter J & Maskin, Eric S, 1979. "The Implementation of Social Choice Rules: Some General Results on Incentive Compatibility," Review of Economic Studies, Wiley Blackwell, vol. 46(2), pages 185-216, April.
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    Citations

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    Cited by:
    1. Lichtenberg, Erik, 2002. "Agriculture and the environment," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 23, pages 1249-1313 Elsevier.
    2. Bystrom, Olof & Bromley, Daniel W., 1998. "Contracting For Nonpoint-Source Pollution Abatement," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(01), July.
    3. Philippe Bontems & Gilles Rotillon & Nadine Turpin, 2008. "Acceptable reforms of agri-environmental policies," Revue d'économie politique, Dalloz, vol. 0(6), pages 847-883.
    4. Herath, Deepananda P.B. & Weersink, Alfons, 1999. "Transaction Costs, Economic Instruments And Environmental Policies," 1999 Annual meeting, August 8-11, Nashville, TN 21588, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Alfons Weersink & John R. Livernois & Jason F. Shogren & James S. Shortle, 1998. "Economic Instruments and Environmental Policy in Agriculture," Canadian Public Policy, University of Toronto Press, vol. 24(3), pages 309-327, September.
    6. Lars Hansen, 2002. "Regulation of Non-Point Emissions – A Variance Based Mechanism," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 21(4), pages 303-316, April.
    7. Carmen Arguedas & Daan Soest, 2011. "Optimal Conservation Programs, Asymmetric Information and the Role of Fixed Costs," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 50(2), pages 305-323, October.
    8. Athanasios Kampas & Ben White, 2004. "Administrative Costs and Instrument Choice for Stochastic Non-point Source Pollutants," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 27(2), pages 109-133, February.
    9. Brennan, Donna C., 1999. "Pollution Control Policies For Australian Prawn Farms," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand 123774, Australian Agricultural and Resource Economics Society.
    10. Baerenklau, Kenneth A., 2002. "Green Payment Programs For Nonpoint Source Pollution Control: How Important Is Targeting For Cost-Effectiveness?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(02), December.
    11. McCann, Laura M.J. & Easter, K. William, 1998. "Estimating Transaction Costs Of Alternative Policies To Reduce Phosphorous Pollution In The Minnesota River," Staff Papers 13919, University of Minnesota, Department of Applied Economics.
    12. P. Bontems & N. Turpin & Gilles Rotillon, 2003. "Acceptibility constraints and self-selecting agri-environmental policies," THEMA Working Papers 2003-14, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    13. Kampas, Athanasios, 2001. "Identifying Common Fallacies in the Choice of Environmental Taxes for Agricultural Pollution Control: The Absence of Transaction Costs and the Normality of Agricultural Pollutants," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 2(2), August.
    14. Kaplan, Jonathan D. & Howitt, Richard E. & Farzin, Y. Hossein, 2003. "An information-theoretical analysis of budget-constrained nonpoint source pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 46(1), pages 106-130, July.
    15. Banerjee, Simanti & de, Vries Frans & Hanley, Nicholas & van, Soest Daan, 2013. "The Impact of Information Provision on Agglomeration Bonus Performance: An Experimental Study on Local Networks," Stirling Economics Discussion Papers 2013-09, University of Stirling, Division of Economics.
    16. Collins, Alan R. & Maille, Peter, 2008. "Farmers as Producers of Clean Water: Getting Incentive Payments Right and Encouraging Farmer Participation," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6342, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    17. Yiridoe, Emmanuel K. & Weersink, Alfons, 1997. "A review and evaluation of agroecosystem health analysis: The role of economics," Agricultural Systems, Elsevier, vol. 55(4), pages 601-626, December.

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