MECHANISM DESIGN FOR NUTRIENT TRADING UNDER ASYMMETRIC INFORMATION

Abstract

The objective of this paper is to evaluate first- and second-best trading mechanisms for regulating point and nonpoint source phosphorus emissions. The trading mechanisms are differentiated on the degree to which regulators can observe abatement efforts. The deadweight losses attributable to informational asymmetries and those of the second-best mechanisms will provide regulators the shadow value of foregoing first-best measures.Environmental Economics and Policy,