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| Aggarwal, Rimjhim; Lichtenberg, Erik. |
| Many notable pollution problems occur in industries where production is carried out under vertical coordination arrangements that are characterized by conditions of double moral hazard. In contrast to situations characterized by full information, we show that standard prescriptions of environmental economics do not apply. Imposing a Pigouvian tax equal to the marginal cost of pollution does not lead to the first best level of pollution. The equilibrium levels of production and pollution are not independent of which agent is taxed. Making either agent or the industry as a whole financially liable for full environmental damage at the margin similarly does not lead to a first best level of pollution. On the contrary, under conditions of double moral... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Environmental Economics and Policy; Industrial Organization. |
| Ano: 2001 |
URL: http://purl.umn.edu/28562 |
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| Aggarwal, Rimjhim; Narayan, Tulika A.. |
| This paper examines the impact of inequality in access to credit on efficiency in extraction from a common resource. A dynamic model is developed, where agents strategically choose the level of sunk capacity and the consequent extraction path. Sunk capacity is a function of cost of credit and serves as a commitment device to deter entry or force exit. Contrary to previous studies based on static settings, our results show that greater inequality does not necessarily lead to greater efficiency in extraction. In particular, we show that under moderate inequality, the resource stock is lower than that under perfect equality. |
| Tipo: Working or Discussion Paper |
Palavras-chave: Resource /Energy Economics and Policy. |
| Ano: 2000 |
URL: http://purl.umn.edu/28572 |
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