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Cover of: Nonpoint Source Pollution, Asymmetric Information, and Output Regulations
Gerhard Clemenz

Nonpoint Source Pollution, Asymmetric Information, and Output Regulations

Section: Articles
Volume 58 (2001) / Issue 1, pp. 31-47 (17)
Published 09.07.2018
DOI 10.1628/0015221022905777
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  • 10.1628/0015221022905777
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Summary
It is assumed that firms have different technologies, and that an environment protection agency (EPA) knows which technologies exist but not which are used by which firms. Only firm outputs and total emissions, but not individual firm emissions are observable. Abatement technologies are known to the EPA, but it cannot observe individual abatement expenditures. It is analyzed under which conditions a regulatory mechanism based on joint punishment ensures a first best or only a second best allocation of resources.