Information Asymmetries, Uncertainties, and Cleanup Delays at Superfund Sites
Gordon C. Rausser
University of California, Berkeley - Department of Agricultural and Resource Economics
Leo K. Simon
U.C. Berkeley, Dept of Agricultural and Resource Economics
Michigan State University
Journal of Environmental Economics and Management (January 1998)
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, Q28Accepted Paper Series
Date posted: February 12, 1998
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