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Cleanup delays at hazardous waste sites: an incomplete information game

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  • Rausser, Gordon C.
  • Simon, Leo K.
  • Zhao, Jinhua

Abstract

This paper studies the incentives facing Potentially Responsible Parties at a hazardous waste site to promote excessive investigation of the site and thus postpone the beginning of the remediation phase of the cleanup. We model the problem as an incomplete information, simultaneous-move game between PRPs. We assume that PRP's liability shares are predetermined. Each PRP's type is its private information about the precision of its own records relating to the site. A strategy for a PRP is a function mapping its type into announced levels of precision. Once types have been realized, the regulator aggregates the realized precision announcements and imposes the investigation schedule according to a predetermined policy function. We show that a pure-strategy Nash equilibrium exists, in which each PRP's strategy is monotone increasing in its type. We prove that PRPs with higher liability shares have greater incentives to delay than those with lower shares. We also show that under certain conditions, when liability shares become more homogeneous, delay becomes more likely. We demonstrate that when certain conditions are imposed on our model, it predicts that two widespread practices--de minimis buyouts and the formation of steering committees--will tend to increase delay.

Suggested Citation

  • Rausser, Gordon C. & Simon, Leo K. & Zhao, Jinhua, 1999. "Cleanup delays at hazardous waste sites: an incomplete information game," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2m01d1r0, Department of Agricultural & Resource Economics, UC Berkeley.
  • Handle: RePEc:cdl:agrebk:qt2m01d1r0
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    References listed on IDEAS

    as
    1. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-180, January.
    2. Athey, Susan, 2001. "Single Crossing Properties and the Existence of Pure Strategy Equilibria in Games of Incomplete Information," Econometrica, Econometric Society, vol. 69(4), pages 861-889, July.
    3. Rausser, Gordon C. & Simon, Leo K. & Zhao, Jinhua, 1998. "Information Asymmetries, Uncertainties, and Cleanup Delays at Superfund Sites," Journal of Environmental Economics and Management, Elsevier, vol. 35(1), pages 48-68, January.
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