Circumventing Information and Incentive Problems in Pollution Control
AbstractTo 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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Bibliographic InfoPaper provided by University of Bergen, Department of Economics in its series Working Papers in Economics with number 04/04.
Length: 6 pages
Date of creation: 10 Jun 2004
Date of revision:
Contact details of provider:
Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway
Web page: http://www.uib.no/econ/en
More information through EDIRC
externalities; asymmetric information; Pareto efficiency; environmental policy; linear Pigouvian tax; Individual Transferable Fees;
Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
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