When a spot market monopolist participates in the futures market, he has an incentive to adjust spot prices to make his futures market position more pro…table. Rational futures market makers take this into account when they set prices. Spot market power thus creates a moral hazard problem...

The optimal design of environmental liability policy focuses on two primary policy issues: the cleanup of existing sources of pollution and the definition and enforcement of policies to promote prospectively efficient environmental risk reduction. Through the analysis of a policy toward a...