Optimal environmental regulation under asymmetric information

Daniel F. Spulber*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

70 Scopus citations

Abstract

A market model of environmental regulation with interdependent production and pollution abatement costs and heterogeneous firms is developed. Firms have private information about costs which have a quadratic form. Firms pursue Bayes-Nash strategies in communication with the regulator. The full information optimum cannot be attained unless gains from trade in the product market net of external damages exceed the information rents earned by firms. Aggregate output and externality levels are lower at the regulated equilibrium than at the full information social optimum.

Original languageEnglish (US)
Pages (from-to)163-181
Number of pages19
JournalJournal of Public Economics
Volume35
Issue number2
DOIs
StatePublished - Mar 1988

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Optimal environmental regulation under asymmetric information'. Together they form a unique fingerprint.

Cite this