Advanced Search
MyIDEAS: Login to save this paper or follow this series

Implementing the Efficient Allocation of Pollution

Contents:

Author Info

  • Joanne Roberts

Abstract

We provide simple mechanisms to implement the efficient allocation of pollution, first assuming complete information across firms and then allowing for incomplete information. Both mechanisms operate by inducing firms to monitor one another, using firms' reports to determine pollution allotments and transfers. The complete information mechanism determines a firm's transfer according to a linear pollution price, set by other firms. Both mechanisms can be modified to be budget-balanced, in and out of equilibrium. The complete information mechanism implements the efficient allocation even when firms are allowed to use mixed strategies. Under a "single-crossing" condition, the same holds for the incomplete information mechanism.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.economics.utoronto.ca/public/workingPapers/UT-ECIPA-JOROB-99-01.pdf
File Function: Main Text
Download Restriction: no

Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number jorob-99-01.

as in new window
Length: 22 pages
Date of creation: 23 Sep 1999
Date of revision:
Handle: RePEc:tor:tecipa:jorob-99-01

Contact details of provider:
Postal: 150 St. George Street, Toronto, Ontario
Phone: (416) 978-5283

Related research

Keywords:

Other versions of this item:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Hahn, Robert W, 1984. "Market Power and Transferable Property Rights," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 99(4), pages 753-65, November.
  2. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, American Finance Association, vol. 16(1), pages 8-37, 03.
  3. Moore, John & Repullo, Rafael, 1988. "Subgame Perfect Implementation," Econometrica, Econometric Society, Econometric Society, vol. 56(5), pages 1191-1220, September.
  4. Sundaram,Rangarajan K., 1996. "A First Course in Optimization Theory," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521497190.
  5. Herriges, Joseph A. & Shogren, Jason F. & Govindasamy, R., 1994. "Budget Balancing Incentive Mechanisms," Staff General Research Papers, Iowa State University, Department of Economics 1503, Iowa State University, Department of Economics.
  6. Jackson, Matthew O, 1991. "Bayesian Implementation," Econometrica, Econometric Society, Econometric Society, vol. 59(2), pages 461-77, March.
  7. Walker, Mark, 1981. "A Simple Incentive Compatible Scheme for Attaining Lindahl Allocations," Econometrica, Econometric Society, Econometric Society, vol. 49(1), pages 65-71, January.
  8. Dasgupta, Partha & Hammond, Peter & Maskin, Eric, 1980. "On Imperfect Information and Optimal Pollution Control," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 47(5), pages 857-60, October.
  9. John Duggan & Joanne Roberts, 2002. "Implementing the Efficient Allocation of Pollution," American Economic Review, American Economic Association, American Economic Association, vol. 92(4), pages 1070-1078, September.
  10. Varian, H,R., 1991. "A Solution to the Problem of Externalities when Agents are Well-Informed," Papers, Michigan - Center for Research on Economic & Social Theory 10, Michigan - Center for Research on Economic & Social Theory.
  11. Eyckmans, Johan, 1997. "Nash Implementation of a Proportional Solution to International Pollution Control Problems," Journal of Environmental Economics and Management, Elsevier, vol. 33(3), pages 314-330, July.
  12. John Duggan, 1998. "An extensive form solution to the adverse selection problem in principal/multi-agent environments," Review of Economic Design, Springer, Springer, vol. 3(2), pages 167-191.
  13. Groves, Theodore, 1979. "Efficient Collective Choice when Compensation is Possible," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 46(2), pages 227-41, April.
  14. Cremer, Jacques & McLean, Richard P, 1988. "Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions," Econometrica, Econometric Society, Econometric Society, vol. 56(6), pages 1247-57, November.
  15. Lewis, Tracy R. & Sappington, David E. M., 1995. "Using markets to allocate pollution permits and other scarce resource rights under limited information," Journal of Public Economics, Elsevier, Elsevier, vol. 57(3), pages 431-455, July.
  16. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, Econometric Society, vol. 41(4), pages 617-31, July.
  17. Harsanyi, John C, 1995. "Games with Incomplete Information," American Economic Review, American Economic Association, American Economic Association, vol. 85(3), pages 291-303, June.
  18. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, Springer, vol. 11(1), pages 17-33, September.
  19. Cremer, Jacques & McLean, Richard P, 1985. "Optimal Selling Strategies under Uncertainty for a Discriminating Monopolist When Demands Are Interdependent," Econometrica, Econometric Society, Econometric Society, vol. 53(2), pages 345-61, March.
  20. Xepapadeas, A. P., 1991. "Environmental policy under imperfect information: Incentives and moral hazard," Journal of Environmental Economics and Management, Elsevier, vol. 20(2), pages 113-126, March.
  21. McAfee, R Preston & Reny, Philip J, 1992. "Correlated Information and Mechanism Design," Econometrica, Econometric Society, Econometric Society, vol. 60(2), pages 395-421, March.
  22. Hurwicz, L, 1979. "Outcome Functions Yielding Walrasian and Lindahl Allocations at Nash Equilibrium Points," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 46(2), pages 217-25, April.
  23. Kritikos Alexander S., 1993. "Environmental Policy under Imperfect Information: Comment," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages 89-92, July.
  24. Moore, John & Repullo, Rafael, 1990. "Nash Implementation: A Full Characterization," Econometrica, Econometric Society, Econometric Society, vol. 58(5), pages 1083-99, September.
  25. Matsushima Hitoshi, 1993. "Bayesian Monotonicity with Side Payments," Journal of Economic Theory, Elsevier, Elsevier, vol. 59(1), pages 107-121, February.
  26. Kwerel, Evan, 1977. "To Tell the Truth: Imperfect Information and Optimal Pollution Control," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 44(3), pages 595-601, October.
  27. Sundaram,Rangarajan K., 1996. "A First Course in Optimization Theory," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521497701.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Candel-Sanchez, Francisco, 2006. "The externalities problem of transboundary and persistent pollution," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 517-526, July.
  2. d'Aspremont, Claude & Cremer, Jacques & Gerard-Varet, Louis-Andre, 2004. "Balanced Bayesian mechanisms," Journal of Economic Theory, Elsevier, Elsevier, vol. 115(2), pages 385-396, April.
  3. Berglann, Helge, 2012. "Implementing optimal taxes using tradable share permits," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 402-409.
  4. Charles Figuières & Marc Willinger, 2012. "Regulating ambient pollution when social costs are unknown," Working Papers, LAMETA, Universtiy of Montpellier 12-17, LAMETA, Universtiy of Montpellier, revised Jun 2012.
  5. Robert Kohn, 2005. "A Theoretical Inefficiency in the International Marketing of Tradable Global Warming Emission Permits," Open Economies Review, Springer, Springer, vol. 16(1), pages 23-31, January.
  6. Yukihiro Nishimura, 2008. "A Lindahl Solution to International Emissions Trading," Working Papers, Queen's University, Department of Economics 1177, Queen's University, Department of Economics.
  7. Nava Kahana & Yosef Mealem & Shmuel Nitzan, 2009. "The Efficient and Fair Approval of “Multiple-Cost-Single-Benefit” Projects Under Unilateral Information," Working Papers, Bar-Ilan University, Department of Economics 2009-14, Bar-Ilan University, Department of Economics.
  8. John Duggan & Joanne Roberts, 2002. "Implementing the Efficient Allocation of Pollution," American Economic Review, American Economic Association, American Economic Association, vol. 92(4), pages 1070-1078, September.
  9. Juan Carlos Carbajal & Andrew McLennan & Rabee Tourky, 2012. "Truthful Implementation and Preference Aggregation in Restricted Domains," Discussion Papers Series 459, School of Economics, University of Queensland, Australia.
  10. Prieger, James E. & Sanders, Nicholas J., 2012. "Verifiable and non-verifiable anonymous mechanisms for regulating a polluting monopolist," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 410-426.
  11. Juan Pablo Montero, 2007. "An Auction Mechanism for the Commons: Some Extensions," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 44(130), pages 141-150.
  12. Francisco Candel-Sánchez, 2012. "Pigouvian taxes and the Varian’s mechanism in dynamic settings," Journal of Regulatory Economics, Springer, Springer, vol. 42(1), pages 39-51, August.
  13. Candel-Sanchez, Francisco, 2006. "Implementing the efficient allocation of a persistent pollutant in the presence of threshold effects," Economics Letters, Elsevier, Elsevier, vol. 90(1), pages 56-59, January.
  14. Francois Destandau & Amir Nafi, 2010. "What is the Best Distribution for Pollution Abatement Efforts? Information for Optimizing the WFD Programs of Measures," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 46(3), pages 337-358, July.
  15. Ross McKitrick, 1999. "A Cournot Mechanism for Pollution Control under Asymmetric Information," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 14(3), pages 353-363, October.
  16. Kahana, Nava & Mealem, Yosef & Nitzan, Shmuel, 2008. "A complete implementation of the efficient allocation of pollution," Economics Letters, Elsevier, Elsevier, vol. 101(2), pages 142-144, November.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:tor:tecipa:jorob-99-01. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RePEc Maintainer).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.