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Liability for Past Environmental Contamination and Privatization

Dietrich Earnhart

Environmental & Resource Economics, 2004, vol. 29, issue 1, 97-122

Abstract: This paper examines the role ofliability for past environmental contaminationin the privatization processes of Central andEastern Europe. In particular, it establishes alink between a risk-averse investor's amount ofinformation regarding the extent of pastenvironmental contamination (and its cleanupcosts) and the investor's willingness to payfor a particular enterprise, i.e., bid. As theinvestor obtains a more precise estimate of theuncertain cleanup costs, the investor facesless risk; therefore, the investor's riskpremium falls and the investor's bid rises.This link generates four hypotheses regarding aprivatization agency's responses to theinvestor's knowledge of clean-up costs. Copyright Kluwer Academic Publishers 2004

Keywords: environmental contamination; liability; rivatization; risk (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (5)

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Working Paper: Liability for Past Environmental Contamination and Privatization (2000) Downloads
Working Paper: Liability for Past Environmental Contamination and Privatization (2000) Downloads
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DOI: 10.1023/B:EARE.0000035452.76736.51

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