Information Asymmetries, Uncertainties, and Cleanup Delays at Superfund Sites

Abstract:     
Superfund cleanup has been extremely slow. Traditional analysis has centered around reducing negotiation and litigation to expedite the cleanup process. We investigate other factors which provide possible incentives for delay, namely discounting, risk aversion, and compensation for off-site damage. We find that liability share plays an essential role in PRPs' incentives to delay. Commonly adopted EPA strategies, such as negotiating with PRP steering committees and buying out de minimis PRPs, may also lead to delay. The paper also designs a Bayesian mechanism for information extraction, and finds that the lump sum transfer mechanism is not always efficient.

JEL Classification: D82, Q28

Accepted Paper Series