MULTIPLE AGENTS, AND AGRICULTURAL NONPOINT-SOURCE WATER POLLUTION CONTROL POLICIES

Abstract

Assuming asymmetric information over farmer profits and zero transaction costs, prior literature has suggested that when regulating nonpoint source water pollution, a tax on management practices (inputs) can implement full-information allocations and is superior to a tax on estimated runoff. Using mechanism design theory under asymmetric information, this paper show that under the same assumptions, management practice taxes and taxes on estimated runoff are equally efficient.Environmental Economics and Policy,