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| Author: | Duggan, J. Roberts, J. |
| Title: | Implementing the Efficient Allocation of Pollution |
| Journal: | American Economic Review
2002 : SEP, VOL. 92:4, p. 1070-1078 |
| Index terms: | POLLUTION MODELS SOCIAL COSTS EXTERNALITIES |
| Language: | eng |
| Abstract: | In this paper, the authors construct a simple mechanism to solve the specific problem of efficiently allocating pollution emissions among a fixed set of firms, assuming the regulatory authority can observe pollution emissions, knows the social cost of pollution, but does not know the relevant characteristics of the firms. The authors assume complete information among the firms. First the authors describe the model. Then the authors present the mechanism and show that it's unique Nash equilibrium yields the socially optimal allocation of pollution and discuss possible extensions of the authors' model, some mentioned above. For another example, while the authors focus on the problem of negative social externalities in this paper, their mechanism works equally well in the "dual" problem of positive social externalities. |
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