Environmental regulators often have imperfect information about regulated firms' abatement costs. In this paper we compare taxes and emissions permits in a dynamic setting in which firms behave strategically. The regulator updates policy over time based upon previous aggregate industry...

Market-based instruments such as fees or tradable perm its can be used to simultaneously regulate point and non-point sources of pollution discharge into a river However sources of pollution discharge often have more information about their own costs of pollution abatement than do regulators....