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| Sproul, Thomas W.; Zilberman, David. |
| Major externality cases are random accidents which are not adequately addressed by the deterministic environmental policy literature -‐ that of Pigouvian taxes, abatement subsidies and cap-‐and-‐trade. We consider a risk-‐neutral industry where firms control the probability and Severity of accidents by preventive and responsive choices, but asymmetric information means Government only observes outcomes. We show that even without intervention, some care will be taken, however -‐ we identify three policies that lead to the optimal solution: strict liability, a Stochastic subsidy, and a mandatory mutual insurance scheme. The subsidy policy may be very costly to taxpayers, especially when prevention affects the probability of accident occurrence, and... |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Agricultural and Food Policy; Risk and Uncertainty. |
| Ano: 2011 |
URL: http://purl.umn.edu/103927 |
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