Universität zu Köln

Goldluecke, Susanne and Schmitz, Patrick W. (2018). Pollution claim settlements reconsidered: Hidden information and bounded payments. Eur. Econ. Rev., 110. S. 211 - 223. AMSTERDAM: ELSEVIER SCIENCE BV. ISSN 1873-572X

Full text not available from this repository.

Abstract

A principal's production decision imposes a negative externality on an agent. The principal may be a pollution-generating firm, the agent may be a nearby town. The principal offers a contract to the agent, who has the right to be free of pollution. Then the agent privately learns the disutility of pollution. Finally, a production level and a transfer payment are implemented. Suppose there is an upper bound (possibly zero) on payments that the agent can make to the principal. In the second-best solution, there is underproduction for low cost types, while there is overproduction for high cost types. In contrast to standard adverse selection models of pollution claim settlements, there may thus be too much pollution compared to the first-best solution. (C) 2018 The Author(s). Published by Elsevier B.V.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Goldluecke, Susanne UNSPECIFIED UNSPECIFIED UNSPECIFIED Schmitz, Patrick W. UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-167647
DOI:	10.1016/j.euroecorev.2018.08.005
Journal or Publication Title:	Eur. Econ. Rev.
Volume:	110
Page Range:	S. 211 - 223
Date:	2018
Publisher:	ELSEVIER SCIENCE BV
Place of Publication:	AMSTERDAM
ISSN:	1873-572X
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language LIMITED-LIABILITY; CONTRACTS; AGENCY; INCENTIVES; PRINCIPAL; COSTS Multiple languages Economics Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/16764