Pressure Groups and Experts in Environmental Regulation

Nicolás Porteiro

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: We study a problem of adverse selection in the context of environmental regulation, where the firm may suffer from a certain degree of ignorance about its own type. In a framework like the construction of a certain infrastructure project, the presence of ignorance about its impact on the environment, can play an important role in the determination of the regulatory policy. First, an optimal contract is constructed for any exogenous level of ignorance. Second, the presence of potentially informed third-parties is studied from the perspective of the regulator, which allows us to analyze the impact on the efficiency of the contract, of the presence of environmentalists and of experts. Then, we obtain some insights on how the problem differs when the degree of ignorance is a choice variable for the firm. We finally use our results to derive policy implications concerning the existing envoronmental regulation, and the potential role of interested parties as information providers.

Keywords: environmental regulation; ignorance; environmentalists; experts. (search for similar items in EconPapers)
JEL-codes: D82 L51 (search for similar items in EconPapers)
Pages: 28
Date: 2001-07-07
New Economics Papers: this item is included in nep-ene, nep-ent, nep-net and nep-res
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Journal Article: Pressure groups and experts in environmental regulation (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:491.01

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