The Value of Information in Public Decisions

Arvind Magesan and Matthew Turner ()

Working Papers from University of Toronto, Department of Economics

Abstract: 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 affect 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 ineffectual.

Keywords: Environmental Policy; Pollution; Optimal Taxation (search for similar items in EconPapers)
JEL-codes: H23 Q52 D81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-env and nep-reg
Date: 2008-12-03
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