The Value of Information in Public Decisions
This paper considers the problem of an imperfectly informed regulator constrained in his choice of environmental regulation by the political opposition of those affected by the policy. We compare the value of two types of information to the regulator: the social cost of pollution and the profi tability of firms present in the economy. We find that in environments where small increases in the losses to regulated firms greatly a ffect the regulator's ability to implement the policy, it is most valuable to learn the types of firms, while it is most valuable to learn the social cost of pollution when small increases in losses are relatively ine ffectual.
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References listed on IDEAS
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- 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.
- George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
- Gary S. Becker, 1984.
"Public Policies, Pressure Groups, and Dead Weight Costs,"
University of Chicago - George G. Stigler Center for Study of Economy and State
35, Chicago - Center for Study of Economy and State.
- Becker, Gary S., 1985. "Public policies, pressure groups, and dead weight costs," Journal of Public Economics, Elsevier, vol. 28(3), pages 329-347, December.
- Kenneth J. Arrow & Anthony C. Fisher, 1974. "Environmental Preservation, Uncertainty, and Irreversibility," The Quarterly Journal of Economics, Oxford University Press, vol. 88(2), pages 312-319.
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