Semiparametric estimation and testing in a model of environmental regulation with adverse selection

Pascal Lavergne and Alban Thomas

Empirical Economics, 2005, vol. 30, issue 1, 192 pages

Abstract: We consider a principal–agent model of environmental regulation with adverse selection, where firms are regulated through contracts. We show how the model allows to recover information on structural cost parameters. We use a semiparametric method to estimate consistently such parameters without specifying the distribution of the agent’s private information. We also show how to check for the specification of the econometric model, as well as auxiliary parametric assumptions, by means of specification tests based on nonparametric estimation. Results are used to discuss a selection of economic issues related to environmental regulation. Copyright Springer-Verlag 2005

Keywords: Semiparametric and non parametric methods; asymmetric and private information; C14; D82 (search for similar items in EconPapers)
Date: 2005
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DOI: 10.1007/s00181-004-0225-5

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