Incentive-Compatible Pollution Control Policies under Asymmetric Information on Both Risk Preferences and Technology
This article proposes a method to accommodate asymmetric information on farmers' risk preferences in designing voluntary environmental policies. By incorporating stochastic efficiency rules in a mechanism design problem, the government can find incentive-compatible policies by knowing only the general class of risk preferences among farmers. The model also accounts for hidden information on technology types and input use. The method is applied empirically to simulate a pollution control program in New York. Results suggest that participation incentives would be inadequate for many risk-averse producers if the government does not account for the diversity in risk preferences. Copyright 2004 American Agricultural Economics Association.
Year of publication: |
2004
|
---|---|
Authors: | Peterson, Jeffrey M. ; Boisvert, Richard N. |
Published in: |
American Journal of Agricultural Economics. - American Agricultural Economics Association. - Vol. 86.2004, 2, p. 291-306
|
Publisher: |
American Agricultural Economics Association |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Peterson, Jeffrey M., (2000)
-
Optimal "Green" Payments to Meet Chance Constraints on Nitrate Leaching Under Price and Yield Risk
Peterson, Jeffrey M.,
-
Multifunctionality and Optimal Environmental Policies for Agriculture in an Open Economy
Peterson, Jeffrey M., (1999)
- More ...