Adverse Selection and Pigou Taxes

Gerhard Clemenz

Environmental & Resource Economics, 1999, vol. 13, issue 1, 13-29

Abstract: It id assumed that firms have different technologies, and that an environment protection agency knows which technologies exist, but not which is used by which firms. Neither the emissions of individual firms nor their total emissions are observable. The output of each individual firm, however, can be monitored without cost. Based on this information tax schemes are constructed which induce firms to produce the socially efficient output quantities. Conditions about cost functions are derived which ensure the existence of tax schemes which yield first best solutions. Copyright Kluwer Academic Publishers 1999

Keywords: adverse selection; emissions; Pigou taxes (search for similar items in EconPapers)
Date: 1999
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DOI: 10.1023/A:1008240027071

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