Incentive Contracts and Environmental Performance Indicators

Peter Goldsmith () and Rishi Basak ()

Environmental & Resource Economics, 2001, vol. 20, issue 4, 259-279

Abstract: A principal-agent (P-A) model is used to analyse the effect of environmentaldiligence, the principal (top management), having to use imperfectperformance indicators and fearing penalties for environmental damages,wants to avoid environmental harm and induce the agent (employeemanipulating hazardous materials) to take appropriate action. To motivatethe agent, the principal offers an incentive contract based onenvironmental stewardship performance (as measured by EPI).Environmental stewardship being difficult to measure, due to high levelsof uncertainty surrounding, EPI, creates impediments to the establishmentof an efficient P-A contract. Copyright Kluwer Academic Publishers 2001

Keywords: compliance; environmental performance indicators; environmental risk; incentives; output uncertainty; principal-agent (search for similar items in EconPapers)
Date: 2001
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://hdl.handle.net/10.1023/A:1013065801547 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:enreec:v:20:y:2001:i:4:p:259-279

Ordering information: This journal article can be ordered from
http://www.springer. ... al/journal/10640/PS2

DOI: 10.1023/A:1013065801547

Access Statistics for this article

Environmental & Resource Economics is currently edited by Ian J. Bateman

More articles in Environmental & Resource Economics from Springer, European Association of Environmental and Resource Economists Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().