Arbeitspapier
Environmental regulation under asymmetric information with type-dependent outside option
We consider how a benevolent regulator should regulate a polluting export industry when the industry, having private information about its abatement efficiency, has an option to move its operations abroad, with a type-dependent outside option rent. The paper focuses on the case where outside option is negatively correlated with abatement efficiency, implying unilateral incentives for overstating abatement efficiency. Because lump-sum taxation is ruled out, rent will have a social cost which is also affected by foreign ownership to the industry. It is demonstrated that optimal regulation calls for excessive pollution among the participating types (relative to complete information), for the purpose of rent extraction, while types being excluded are the ones with the higher outside option (the least efficient types). We also demonstrate that with a higher foreign ownership share, the larger is the set of excluded types, while overpollution should be reduced.
- Language
-
Englisch
- Bibliographic citation
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Series: Memorandum ; No. 2000,18
- Classification
-
Wirtschaft
Externalities
Asymmetric and Private Information; Mechanism Design
Positive Analysis of Policy Formulation and Implementation
Economics of Regulation
- Subject
-
Asymmetric information
environmental regulation
foreign ownership
type dependent participation constraints
Asymmetrische Information
Umweltpolitik
Theorie der Regulierung
Industriestandort
Standortwahl
Theorie
- Event
-
Geistige Schöpfung
- (who)
-
Vislie, Jon
- Event
-
Veröffentlichung
- (who)
-
University of Oslo, Department of Economics
- (where)
-
Oslo
- (when)
-
2000
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Vislie, Jon
- University of Oslo, Department of Economics
Time of origin
- 2000
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