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Local Pollution in Federal Systems

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  • Per Andersen

    ()

  • Frank Jensen

    ()

Abstract

It is widely accepted that decentralized control of local pollution is inefficient if the central and the local authorities are imperfectly informed. This paper shows how the central authority can introduce a flexible grant-in-aid system that induces the local authority to use a weighted combination of local and central information when the local authority suffers from confirmatory bias. If the central authority is highly uncertain about the environmental effects of a specific pollutant, the tax/subsidy scheme can be designed to allow local information to play an essential role in the environmental policy. If the central authority is certain that a pollutant must not exceed a specific limit, the tax/subsidy scheme can be designed to allow local information little influence on the environmental policy. Copyright Kluwer Academic Publishers 2003

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File URL: http://hdl.handle.net/10.1023/B:EARE.0000003596.02533.81
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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 26 (2003)
Issue (Month): 3 (November)
Pages: 417-428

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Handle: RePEc:kap:enreec:v:26:y:2003:i:3:p:417-428

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Web page: http://www.springerlink.com/link.asp?id=100263

Related research

Keywords: central information; federal systems and local information;

References

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  1. List, John A. & Mason, Charles F., 2001. "Optimal Institutional Arrangements for Transboundary Pollutants in a Second-Best World: Evidence from a Differential Game with Asymmetric Players," Journal of Environmental Economics and Management, Elsevier, vol. 42(3), pages 277-296, November.
  2. Silva, Emilson C. D. & Caplan, Arthur J., 1997. "Transboundary Pollution Control in Federal Systems," Journal of Environmental Economics and Management, Elsevier, vol. 34(2), pages 173-186, October.
  3. Silva, Emilson C. D., 1997. "Decentralized and Efficient Control of Transboundary Pollution in Federal Systems," Journal of Environmental Economics and Management, Elsevier, vol. 32(1), pages 95-108, January.
  4. Myers & G.M., 1989. "Optimality, Free Mobility And The Regional Authority In Federation," Working Papers 10, John Deutsch Institute for the Study of Economic Policy.
  5. Farrell, Joseph, 1987. "Information and the Coase Theorem," Journal of Economic Perspectives, American Economic Association, vol. 1(2), pages 113-29, Fall.
  6. Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.
  7. List, John A. & Gerking, Shelby D., 1996. "Optimal Institutional Arrangements for Pollution Control," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 26(1).
  8. Klibanoff, Peter & Morduch, Jonathan, 1995. "Decentralization, Externalities, and Efficiency," Review of Economic Studies, Wiley Blackwell, vol. 62(2), pages 223-47, April.
  9. Wellisch, Dietmar, 1994. "Interregional spillovers in the presence of perfect and imperfect household mobility," Journal of Public Economics, Elsevier, vol. 55(2), pages 167-184, October.
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Cited by:
  1. Katarina Elofsson, 2011. "Delegation of Decision-Rights for Wetlands," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 50(2), pages 285-303, October.

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