We consider the design of ambient taxes for risk-neutral and risk-averse polluters when polluters and the regulatory agency have asymmetric information about environmental relationships and probabilities associated with random events. Unlike prior work, we show that under these conditions, optimal ambient taxes must be firm-specific, and accompanied by additional incentives to influence polluters' choices of abatement techniques.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics
- Management, Monitoring, Policy and Law