Deterrence vs. Efficiency To Regulate Nonpoint Source Pollution
AbstractIn the context of nonpoint source pollution the regulator can not attribute individually the responsibility of pollution because of informational asymmetry which makes the costs of monitoring of individual emission very high. This grounds a moral hazard problem. We analyse group performance based instruments to regulate this kind of informational problem. In particular, we assess randomand collective fining schemes with respect to their deterrence and efficiency. We show that a collective fine scheme is more deterrent than a random fine scheme. However, the analysis of efficiency is less categorical between these two schemes. The efficiency depends on the number of non-compliant agents. If the number of non-compliant agents is high it is better to implement a collective fine scheme. If the number of non-compliant agents is small it is better to implement a random fine scheme.
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Bibliographic InfoPaper provided by LAMETA, Universtiy of Montpellier in its series Working Papers with number 09-22.
Length: 18 pages
Date of creation: Dec 2009
Date of revision: Dec 2009
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-10 (All new papers)
- NEP-CTA-2010-01-10 (Contract Theory & Applications)
- NEP-ENV-2010-01-10 (Environmental Economics)
- NEP-REG-2010-01-10 (Regulation)
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