Protecting the environment when costs and benefits are privately known
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I analyze different approaches for protecting the environment when stakeholders are privately informed about the costs and benefits of pollution reduction. The presence of asymmetric information calls for some important departures from the textbook prescriptions of marketable permits and emission taxes for controlling pollution. For instance, it may no longer be optimal to equate the social marginal benefits to the marginal cost of cleanup in determining appropriate abatement levels. I conclude this review with some suggestions for future research in this area.
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Walter M. Upchurch, Jr. Distinguished Professor of Business Administration
Tracy Lewis is Professor of Economics at the Fuqua School of Business at Duke University, where he holds the Black Chair in Economics. Professor Lewis founded the Innovation Center at the University. Prior to joining the Duke University Faculty in 2003, he served on the faculties at the University of Florida, at the California Institute of Technology, the University of British Columbia, and the University of California, Davis. Aside from academic employment, he has also held positions at the Fed