TRANSACTION COSTS AND AGRICULTURAL NONPOINT-SOURCE WATER POLLUTION CONTROL POLICIES

Rodney B.W. Smith and Theodore D. Tomasi

Journal of Agricultural and Resource Economics, 1995, vol. 20, issue 2, 14

Abstract: Mechanism design theory is used to develop the properties of optimal pollution control incentive schemes in the presence of adverse selection, moral hazard, and transaction costs. The model presented here shows (a) with no deadweight costs (transaction costs) , first-best allocations are always possible; (b) in the presence of transaction costs (caused by raising taxes), only second-best allocations are feasible; and (c) the conditions under which the optimal incentive scheme implementing second-best allocations will be a nonlinear tax, a standard(s), or a combination of both taxes and standard(s).

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Date: 1995
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Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:jlaare:30768

DOI: 10.22004/ag.econ.30768

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