Mechanism design theory is used to develop the properties of optimal pollution control incentive schemes in the presence of adverse selection, moral hazard, and transaction costs. The model presented here shows (a) with no deadweight costs (transaction costs) , first-best allocations are always...

Assuming asymmetric information over farmer profits and zero transaction costs, prior literature has suggested that when regulating nonpoint source water pollution, a tax on management practices (inputs) can implement full-information allocations and is superior to a tax on estimated runoff....

The solution to the problem of how long a present valve maximizing forester should let trees grow has a long history in the literature of economics and forestry. Until recently, however, the comparative statics of the forestry problem when there are two decision variables, an initial input at...