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Stimulating Mechanisms in Ecologically Motivated Regulation: Will Ecological Policies in Transition and Developing Countries Become Efficient?


  • Matveenko, V.

    (Institute for Economics and Mathematics of Russian Academy of Sciences, St. Petersburg, Russia)


In this paper, the theory of stimulating mechanisms is used to study the relationship between characteristics of polluting firms and results of ecological policy. It is shown that the optimal ecologically motivated policy can qualitatively change in accordance with a relative effectiveness of types of firms. Two models are proposed. In the first of them the regulator has no information on a type of firm but possesses information about cost functions of the types of firms. In the second (game) model, moreover, the regulator has no information about levels of investment chosen by the types of firms.

Suggested Citation

  • Matveenko, V., 2010. "Stimulating Mechanisms in Ecologically Motivated Regulation: Will Ecological Policies in Transition and Developing Countries Become Efficient?," Journal of the New Economic Association, New Economic Association, issue 8, pages 10-34.
  • Handle: RePEc:nea:journl:y:2010:i:8:p:10-34

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    References listed on IDEAS

    1. Tracy R. Lewis, 1996. "Protecting the Environment When Costs and Benefits Are Privately Known," RAND Journal of Economics, The RAND Corporation, vol. 27(4), pages 819-847, Winter.
    2. Juan-Pablo Montero, 2005. "Pollution Markets with Imperfectly Observed Emissions," RAND Journal of Economics, The RAND Corporation, vol. 36(3), pages 645-660, Autumn.
    3. Partha Dasgupta & Peter Hammond & Eric Maskin, 1980. "On Imperfect Information and Optimal Pollution Control," Review of Economic Studies, Oxford University Press, vol. 47(5), pages 857-860.
    4. Spulber, Daniel F., 1988. "Optimal environmental regulation under asymmetric information," Journal of Public Economics, Elsevier, vol. 35(2), pages 163-181, March.
    5. Mirrlees, James A, 1997. "Information and Incentives: The Economics of Carrots and Sticks," Economic Journal, Royal Economic Society, vol. 107(444), pages 1311-1329, September.
    6. Segerson, Kathleen, 1988. "Uncertainty and incentives for nonpoint pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 87-98, March.
    7. Evan Kwerel, 1977. "To Tell the Truth: Imperfect Information and Optimal Pollution Control," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 595-601.
    8. Baliga, Sandeep & Maskin, Eric, 2003. "Mechanism design for the environment," Handbook of Environmental Economics,in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 7, pages 305-324 Elsevier.
    9. Cowen, Tyler & Glazer, Amihai & Zajc, Katarina, 2000. "Credibility may require discretion, not rules," Journal of Public Economics, Elsevier, vol. 76(2), pages 295-306, May.
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    Cited by:

    1. Bagrat Yerznkyan, 2012. "Pluralistic Institutional Solutions Of The Problem Of Externalities," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 8(2), pages 73-86.

    More about this item


    ecological policy; regulation; stimulating mechanism; contract; relative economic effectiveness; Nash equilibrium; developing and transition economies;

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems


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