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Circumventing Information and Incentive Problems in Pollution Control

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  • Berglann, Helge

    ()
    (Norwegian Agricultural Economics Research Institute)

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    Abstract

    To mitigate pollution this note advocates a two-component system. The polluter pays for the damage he causes and for the opportunity to do so. The main motivation is to achieve Pareto e¢ ciency while avoiding problems caused by asymmetric information and strategic moves. The proposed regime induces each polluter to solve the same optimization problem as an altruistic planner. Since the monetary burden of the scheme matches a linear Pigouvian tax, it does not encourage firms to split or merge.

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    File URL: http://www.uib.no/filearchive/04-04.pdf
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    Bibliographic Info

    Paper provided by University of Bergen, Department of Economics in its series Working Papers in Economics with number 04/04.

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    Length: 6 pages
    Date of creation: 10 Jun 2004
    Date of revision:
    Handle: RePEc:hhs:bergec:2004_004

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    Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway
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    Web page: http://www.uib.no/econ/en
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    Related research

    Keywords: externalities; asymmetric information; Pareto efficiency; environmental policy; linear Pigouvian tax; Individual Transferable Fees;

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