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Implementing second-best environmental policy under adverse selection

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  • Sheriff, Glenn

Abstract

A key obstacle to practical application of mechanism design theory to regulation is the difficulty of obtaining consistent beliefs regarding information that theoretical models assume to be commonly held. This article presents a solution to this problem by developing an easily implemented empirical methodology with which the government can use available data to develop beliefs regarding the technology and distribution of types in a regulated sector characterized by hidden information. Results are used to calibrate a second-best land conservation mechanism and evaluate its cost relative to simpler alternatives.

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File URL: http://www.sciencedirect.com/science/article/B6WJ6-4V1KMK4-1/2/2e4b98f13e308cab0f09881c69e35c1c
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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 57 (2009)
Issue (Month): 3 (May)
Pages: 253-268

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Handle: RePEc:eee:jeeman:v:57:y:2009:i:3:p:253-268

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Web page: http://www.elsevier.com/locate/inca/622870

Related research

Keywords: Empirical contract theory Environmental policy Stochastic frontier analysis Adverse selection;

References

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Citations

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Cited by:
  1. B. Kelsey Jack, 2013. "Private Information and the Allocation of Land Use Subsidies in Malawi," American Economic Journal: Applied Economics, American Economic Association, vol. 5(3), pages 113-35, July.
  2. Sipilainen, Timo & Huhtala, Anni, 2012. "Opportunity Costs of Providing Crop Diversity in Organic and Conventional Farming," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126652, International Association of Agricultural Economists.
  3. Sipilainen, Timo & Huhtala, Anni, 2011. "Opportunity Costs of Providing Crop Diversity in Organic and Conventional Farming: Would Targeted Environmental Policies Make Economic Sense?," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114527, European Association of Agricultural Economists.

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