GREEN PAYMENT PROGRAMS FOR NONPOINT SOURCE POLLUTION CONTROL: HOW IMPORTANT IS TARGETING FOR COST-EFFECTIVENESS?
Mechanism design theory is used to examine the case of a cost-minimizing regulator who uses input-reduction subsidies to meet an exogenously imposed ambient standard for nonpoint source pollution. A general result claimed for a welfare-maximizing equilibrium. Numerical results suggest the ability to directly target contracts reduces costs significantly for the regulator. But in the absence of this ability, indirect targeting reduces costs only slightly.
Baerenklau, Kenneth A., GREEN PAYMENT PROGRAMS FOR NONPOINT SOURCE POLLUTION CONTROL: HOW IMPORTANT IS TARGETING FOR COST-EFFECTIVENESS?, Journal of Agricultural and Resource Economics, Volume 27, Issue 2, December 2002, Pages 406–419
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