Optimal Regulation of Private Production Contracts with Environmental Externalities
Pierre Dubois and
Tomislav Vukina ()
Journal of Regulatory Economics, 2004, vol. 26, issue 3, 287-301
We address the problem of optimal regulation of an industry where the production of a polluting output is contracted with independent agents. The provision of inputs is divided between the principal and the agent such that the production externality results from their joint actions. The main result shows that in the three-tier hierarchy (regulator-firm-agent) involving a double-sided moral hazard, the equivalence across regulatory schemes generally obtains. The only task for the regulator is to determine the optimal total fiscal revenue in each state of nature because any sharing of the regulatory burden between the firm and the agent generates the same solution. The equivalence principle is upset only when the effects of regulation on the endogenous organizational choices are explicitly taken into account. Copyright Kluwer Academic Publishers 2004
Keywords: regulation; pollution; principal–agent relationship; moral hazard (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
Working Paper: Optimal regulation of private production contracts with environmental externalities (2004)
Working Paper: Optimal Regulation of Private Production Contracts with Environmental Externalities (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:regeco:v:26:y:2004:i:3:p:287-301
Ordering information: This journal article can be ordered from
http://www.springer. ... on/journal/11149/PS2
Access Statistics for this article
Journal of Regulatory Economics is currently edited by Menaham Spiegel
More articles in Journal of Regulatory Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().