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.
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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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