IDEAS home Printed from https://ideas.repec.org/p/cdl/agrebk/qt2m01d1r0.html
   My bibliography  Save this paper

Cleanup delays at hazardous waste sites: an incomplete information game

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://www.escholarship.org/uc/item/2m01d1r0.pdf;origin=repeccitec
    Download Restriction: no
    ---><---

    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.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brunner, Christoph & Hu, Audrey & Oechssler, Jörg, 2014. "Premium auctions and risk preferences: An experimental study," Games and Economic Behavior, Elsevier, vol. 87(C), pages 467-484.
    2. Chi, Chang Koo & Murto, Pauli & Valimaki, Juuso, 2017. "All-Pay Auctions with Affiliated Values," MPRA Paper 80799, University Library of Munich, Germany.
    3. Gordon Rausser & Leo Simon & Jinhua Zhao, 2015. "Rational exaggeration and counter-exaggeration in information aggregation games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 59(1), pages 109-146, May.
    4. Hu, Audrey & Offerman, Theo & Zou, Liang, 2011. "Premium auctions and risk preferences," Journal of Economic Theory, Elsevier, vol. 146(6), pages 2420-2439.
    5. Cumbul, Eray & Virág, Gábor, 2018. "Multilateral limit pricing in price-setting games," Games and Economic Behavior, Elsevier, vol. 111(C), pages 250-273.
    6. Nikolai Kukushkin, 2015. "The single crossing conditions for incomplete preferences," International Journal of Game Theory, Springer;Game Theory Society, vol. 44(1), pages 225-251, February.
    7. Prokopovych, Pavlo & Yannelis, Nicholas C., 2017. "On strategic complementarities in discontinuous games with totally ordered strategies," Journal of Mathematical Economics, Elsevier, vol. 70(C), pages 147-153.
    8. Rausser, Gordon C. & Simon, Leo K. & Zhao, Jinhua, 2000. "Environmental Remedies: An Incomplete Information Aggregation Game," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt9z00731z, Department of Agricultural & Resource Economics, UC Berkeley.
    9. Philip J. Reny, 2011. "On the Existence of Monotone Pure‐Strategy Equilibria in Bayesian Games," Econometrica, Econometric Society, vol. 79(2), pages 499-553, March.
    10. Feess, Eberhard & Grund, Christian & Walzl, Markus & Wohlschlegel, Ansgar, 2020. "Competing trade mechanisms and monotone mechanism choice," European Journal of Operational Research, Elsevier, vol. 280(3), pages 1108-1121.
    11. Kata Bognar & Lones Smith, 2004. "We Can't Argue Forever," CERS-IE WORKING PAPERS 0415, Institute of Economics, Centre for Economic and Regional Studies.
    12. Rabah Amir, 2005. "Supermodularity and Complementarity in Economics: An Elementary Survey," Southern Economic Journal, John Wiley & Sons, vol. 71(3), pages 636-660, January.
    13. Lebrun, Bernard, 2006. "Uniqueness of the equilibrium in first-price auctions," Games and Economic Behavior, Elsevier, vol. 55(1), pages 131-151, April.
    14. Kukushkin, Nikolai S., 2013. "Approximate Nash equilibrium under the single crossing conditions," MPRA Paper 44320, University Library of Munich, Germany.
    15. Araujo, Aloisio & Moreira, Humberto, 2010. "Adverse selection problems without the Spence-Mirrlees condition," Journal of Economic Theory, Elsevier, vol. 145(3), pages 1113-1141, May.
    16. Prokopovych, Pavlo & Yannelis, Nicholas C., 2023. "On monotone pure-strategy Bayesian-Nash equilibria of a generalized contest," Games and Economic Behavior, Elsevier, vol. 140(C), pages 348-362.
    17. Prokopovych, Pavlo & Yannelis, Nicholas C., 2019. "On monotone approximate and exact equilibria of an asymmetric first-price auction with affiliated private information," Journal of Economic Theory, Elsevier, vol. 184(C).
    18. Kunimoto, Takashi & Yamashita, Takuro, 2020. "Order on types based on monotone comparative statics," Journal of Economic Theory, Elsevier, vol. 189(C).
    19. Han, Seungjin, 2013. "Asymmetric first-price menu auctions under intricate uncertainty," Journal of Economic Theory, Elsevier, vol. 148(5), pages 2068-2095.
    20. Łukasz Balbus & Paweł Dziewulski & Kevin Reffett & Łukasz Woźny, 2015. "Differential information in large games with strategic complementarities," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 59(1), pages 201-243, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdl:agrebk:qt2m01d1r0. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lisa Schiff (email available below). General contact details of provider: https://edirc.repec.org/data/dabrkus.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.