Implementing second-best environmental policy under adverse selection

Glenn Sheriff

doi:10.1016/j.jeem.2008.10.001

Implementing second-best environmental policy under adverse selection

Glenn Sheriff

Research output: Contribution to journal › Article › peer-review

10 Scopus citations

Abstract

A key obstacle to practical application of mechanism design theory to regulation is the difficulty of obtaining consistent beliefs regarding information that theoretical models assume to be commonly held. This article presents a solution to this problem by developing an easily implemented empirical methodology with which the government can use available data to develop beliefs regarding the technology and distribution of types in a regulated sector characterized by hidden information. Results are used to calibrate a second-best land conservation mechanism and evaluate its cost relative to simpler alternatives.

Original language	English (US)
Pages (from-to)	253-268
Number of pages	16
Journal	Journal of Environmental Economics and Management
Volume	57
Issue number	3
DOIs	https://doi.org/10.1016/j.jeem.2008.10.001
State	Published - May 2009
Externally published	Yes

Keywords

Adverse selection
Empirical contract theory
Environmental policy
Stochastic frontier analysis

ASJC Scopus subject areas

Economics and Econometrics
Management, Monitoring, Policy and Law

Access to Document

10.1016/j.jeem.2008.10.001

Cite this

@article{5b3d650aaf0845ababe684c5b6809cf8,

title = "Implementing second-best environmental policy under adverse selection",

abstract = "A key obstacle to practical application of mechanism design theory to regulation is the difficulty of obtaining consistent beliefs regarding information that theoretical models assume to be commonly held. This article presents a solution to this problem by developing an easily implemented empirical methodology with which the government can use available data to develop beliefs regarding the technology and distribution of types in a regulated sector characterized by hidden information. Results are used to calibrate a second-best land conservation mechanism and evaluate its cost relative to simpler alternatives.",

keywords = "Adverse selection, Empirical contract theory, Environmental policy, Stochastic frontier analysis",

author = "Glenn Sheriff",

year = "2009",

month = may,

doi = "10.1016/j.jeem.2008.10.001",

language = "English (US)",

volume = "57",

pages = "253--268",

journal = "Journal of Environmental Economics and Management",

issn = "0095-0696",

publisher = "Academic Press Inc.",

number = "3",

}

TY - JOUR

T1 - Implementing second-best environmental policy under adverse selection

AU - Sheriff, Glenn

PY - 2009/5

Y1 - 2009/5

N2 - A key obstacle to practical application of mechanism design theory to regulation is the difficulty of obtaining consistent beliefs regarding information that theoretical models assume to be commonly held. This article presents a solution to this problem by developing an easily implemented empirical methodology with which the government can use available data to develop beliefs regarding the technology and distribution of types in a regulated sector characterized by hidden information. Results are used to calibrate a second-best land conservation mechanism and evaluate its cost relative to simpler alternatives.

AB - A key obstacle to practical application of mechanism design theory to regulation is the difficulty of obtaining consistent beliefs regarding information that theoretical models assume to be commonly held. This article presents a solution to this problem by developing an easily implemented empirical methodology with which the government can use available data to develop beliefs regarding the technology and distribution of types in a regulated sector characterized by hidden information. Results are used to calibrate a second-best land conservation mechanism and evaluate its cost relative to simpler alternatives.

KW - Adverse selection

KW - Empirical contract theory

KW - Environmental policy

KW - Stochastic frontier analysis

UR - http://www.scopus.com/inward/record.url?scp=64049117736&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=64049117736&partnerID=8YFLogxK

U2 - 10.1016/j.jeem.2008.10.001

DO - 10.1016/j.jeem.2008.10.001

M3 - Article

AN - SCOPUS:64049117736

SN - 0095-0696

VL - 57

SP - 253

EP - 268

JO - Journal of Environmental Economics and Management

JF - Journal of Environmental Economics and Management

IS - 3

ER -

Implementing second-best environmental policy under adverse selection

Abstract

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Cite this