Protecting the Environment When Costs and Benefits are Privately Known

In this survey I analyze different approaches for protecting the environment when stakeholders are privately informed about the costs and benefits of pollution reduction. The presence of asymmetric information calls for some important departures from the textbook prescriptions of marketable permits and emission taxes for controlling pollution. For instance, it may no longer be optimal to equate the social marginal benefits to the marginal cost of cleanup in determining appropriate abatement levels. I conclude this review with some suggestions for future research in this area.

[1]  Richard Schmalensee,et al.  Good Regulatory Regimes , 1989 .

[2]  J. Laffont,et al.  Adverse Selection and Renegotiation in Procurement , 1990 .

[3]  Bengt Holmstrom,et al.  On The Theory of Delegation , 1980 .

[4]  Thomas W. Gilligan,et al.  Collective Decisionmaking and Standing Committees: An Informational Rationale for Restrictive Amendment Procedures , 1987 .

[5]  Daniel F. Spulber.  Optimal environmental regulation under asymmetric information , 1988 .

[6]  Timothy O'Riordan,et al.  Valuing Environmental Goods: An Assessment of the Contingent Valuation Method , 1987 .

[7]  Timothy Besley,et al.  The economics of rotating savings and credit associations , 1990 .

[8]  Paul R. Milgrom,et al.  Relying on the Information of Interested Parties , 1985 .

[9]  M. Dewatripont,et al.  Economic Reform and Dynamic Political Constraints , 1992 .

[10]  Mark Armstrong,et al.  Delegation and discretion , 1994 .

[11]  J. Laffont,et al.  Using Cost Observation to Regulate Firms , 1986, Journal of Political Economy.

[12]  Roger G. Noll,et al.  Barriers to Implementing Tradable Air Pollution Permits: Problems of Regulatory Interactions , 1983 .

[13]  Richard T. Carson,et al.  Contingent Valuation and Revealed Preference Methodologies: Comparing the Estimates for Quasi-Public Goods , 1995 .

[14]  Incentives for environmental protection , 1984 .

[15]  Robert N. Stavins,et al.  Incentive-Based Environmental Regulation: A New Era from an Old Idea , 1990 .

[16]  C. Mezzetti,et al.  The Possibility of Efficient Mechanisms for Trading an Indivisible Object , 1993 .

[17]  J. Tirole,et al.  Planning Under Incomplete Information and the Ratchet Effect. , 1985 .

[18]  D. P. Baron,et al.  Regulation and information in a continuing relationship , 1984 .

[19]  G. Anderson.  The economic theory of regulation , 1994 .

[20]  Joseph Farrell,et al.  Information and the Coase Theorem , 1987 .

[21]  Theodore Groves,et al.  Incentives in Teams , 1973 .

[22]  Evan Kwerel,et al.  To Tell the Truth: Imperfect Information and Optimal Pollution Control , 1977 .

[23]  D. Sappington,et al.  Incentives for Conservation and Quality-Improvement by Public Utilities , 1992 .

[24]  Abhijit Banerjee,et al.  Thy Neighbor's Keeper: the Design of a Credit Cooperative with Theory and a Test , 1994 .

[25]  M. Cropper,et al.  Environmental Economics: A Survey , 1992 .

[26]  John R. Wright,et al.  Competitive lobbying for a legislator's vote , 1992 .

[27]  Jerry A. Hausman,et al.  Contingent valuation : a critical assessment , 1993 .

[28]  Peter S. Menell.  The Limitations of Legal Institutions for Addressing Environmental Risks , 1991 .

[29]  J. Laffont,et al.  THE DYNAMICS OF INCENTIVE CONTRACTS , 1988 .

[30]  E. H. Clarke.  Multipart pricing of public goods , 1971 .

[31]  J. Laffont,et al.  Pollution Permits and Compliance Strategies , 1996 .

[32]  J. Swierzbinski,et al.  Guilty Until Proven Innocent - Regulation with Costly and Limited Enforcement , 1994 .

[33]  E. Maskin,et al.  Input Versus Output Incentive Schemes , 1985 .

[34]  Hal R. Varian,et al.  MONITORING AGENTS WITH OTHER AGENTS , 1989 .

[35]  E. Maskin,et al.  On Imperfect Information and Optimal Pollution Control , 1980 .

[36]  R. Myerson.  Incentive Compatibility and the Bargaining Problem , 1979 .

[37]  Dilip Mookherjee,et al.  Delegation as Commitment: The Case of Income Tax Audits , 1989 .

[38]  W. Rogerson.  On the Optimality of Menus of Linear Contracts , 1987 .

[39]  M. Satterthwaite,et al.  Efficient Mechanisms for Bilateral Trading , 1983 .

[40]  M. Olson,et al.  The Logic of Collective Action , 1965 .

[41]  Gordon Tullock,et al.  Polluters' Profits and Political Response: Direct Controls Versus Taxes , 1975 .

[42]  R. Feenstra,et al.  Eliminating price supports: A political economy perspective , 1989 .

[43]  Jean-Jacques Laffont,et al.  Regulation, moral hazard and insurance of environmental risks , 1995 .

[44]  Robert Cameron Mitchell,et al.  Using Surveys to Value Public Goods: The Contingent Valuation Method , 1989 .

[45]  Jean-Jacques Laffont,et al.  Regulation of Pollution with Asymmetric Information , 1993 .

[46]  F. Gasmi,et al.  Rent extraction and incentives for efficiency in recent regulatory proposals , 1994 .

[47]  D. P. Baron,et al.  Regulation of prices and pollution under incomplete information , 1985 .

[48]  Roger G. Noll,et al.  Administrative Procedures as Instruments of Political Control , 1987 .

[49]  Roger G. Noll,et al.  STRUCTURE AND PROCESS, POLITICS AND POLICY: ADMINISTRATIVE ARRANGEMENTS AND THE POLITICAL CONTROL OF AGENCIES , 1989 .

[50]  Robert D. Cooter,et al.  The Cost of Coase , 1982, The Journal of Legal Studies.

[51]  Wallace E. Oates,et al.  The theory of environmental policy , 1976 .

[52]  Marc Roberts,et al.  Effluent charges and licenses under uncertainty , 1976 .

[53]  David P. Baron,et al.  Commitment and Fairness in a Dynamic Regulatory Relationship , 1987 .

[54]  D. Sappington,et al.  Using markets to allocate pollution permits and other scarce resource rights under limited information , 1995 .

[55]  S. Peltzman.  Toward a More General Theory of Regulation , 1976, The Journal of Law and Economics.

[56]  J. Morduch,et al.  Decentralization, Externalities, and Efficiency , 1995 .

[57]  Marcel Boyer,et al.  Bayesian Models in Economic Theory , 1984 .

[58]  G. Fishelson.  Emission control policies under uncertainty , 1976 .

[59]  M. Weitzman.  Prices vs. Quantities , 1974 .

[60]  Wesley A. Magat,et al.  Reform of environmental regulation , 1982 .

[61]  Joseph E. Stiglitz,et al.  Peer Monitoring and Credit Markets , 1990 .

[62]  J. Laffont,et al.  A Theory of Incentives in Procurement and Regulation , 1993 .

[63]  Jean Tirole,et al.  The Politics of Government Decision-Making : a Theory of Regulatory Capture , 1991 .

[64]  T. Moe.  The New Economics of Organization , 1984 .

[65]  D. P. Baron,et al.  Noncooperative regulation of a nonlocalized externality , 1985 .

[66]  J. Tirole,et al.  Financial Intermediation, Loanable Funds, and The Real Sector , 1997 .

[67]  Robert N. Stavins,et al.  TRANSACTION COSTS AND THE PERFORMANCE OF MARKETS FOR POLLUTION CONTROL , 1993 .

[68]  J. M. Griffin,et al.  Uncertainty and the choice of pollution control instruments , 1976 .

[69]  Jean Tirole,et al.  Collusion and the Theory of Organizations , 1991 .

[70]  Mark A. Zupan,et al.  Capture and Ideology in the Economic Theory of Politics , 1984 .

[71]  David P. Baron,et al.  Design of regulatory mechanisms and institutions , 1989 .

[72]  Barton L. Lipman,et al.  Current Draft , 1994 .