Strategic Environmental Policy Under Incomplete Information

Niels Nannerup ()

Environmental & Resource Economics, 1998, vol. 11, issue 1, 78 pages

Abstract: This paper introduces incomplete information into recent analyses of strategic environmental policy. It is shown how asymmetric information between planners and producers affects national incentives to impose strategic environmental standards on domestic industries in international oligopolistic competition. Relative to the full-information case, incomplete information is likely to mitigate allocative distortions originating from strategic behaviour. A countervailing effect, tending to raise distortion, is however revealed from the analysis. This effect is absent when governments intervene in free trade through direct production subsidies. The results suggest that incentives to capture foreign rents are less reduced due to private information, when environmental standards, rather than direct production subsidies, are the strategic instrument. Copyright Kluwer Academic Publishers 1998

Keywords: international trade; imperfect competition; strategic environmental behaviour; asymmetric information (search for similar items in EconPapers)
Date: 1998
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Citations: View citations in EconPapers (10)

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DOI: 10.1023/A:1008299628367

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