| Paper Title: |
Environmental Regulation In Vertically Coordinated Industries |
||
| Presenting Author: | Rimjhim Aggarwal (University of Maryland) | ||
| Coauthor 1: | Erik Lichtenberg | ||
| Coauthor 2: | |||
| Coauthor 3: | |||
| Abstract: |
Many notable pollution problems occur in industries where production is carried out under vertical coordination arrangements characterized by double moral hazard. In contrast to situations characterized by full information, we show that imposing a Pigouvian tax equal to the marginal cost of pollution does not lead to the first best level of pollution. Making either agent or the industry as a whole financially liable for full environmental damage at the margin does not lead to a first best level of pollution. Instead, the industry should be liable for less than the full cost of environmental damage. Under some conditions, the current approach to policy (which makes one agent fully liable for environmental damage) results in too little pollution and production. Also in contrast to outcomes under complete information, such regulations can result in negatively correlated deviations of pollution and production from their first best levels.
|
||
| Link to paper: | http://weber.ucsd.edu/~carsonvs/papers/274.pdf | ||
| Session / Day / Time | 1F / Monday / 8:00 - 10:00 am | ||
|
Please use your browser's
"back" button to get to the previous page.
|
|||