Regulation with Direct Benefits of Information Disclosure and Imperfect Monitoring

Posted: 20 Jan 2015

See all articles by Mary F. Evans

Mary F. Evans

Claremont McKenna College - Robert Day School of Economics and Finance

Scott M. Gilpatric

University of Tennessee

Lirong Liu

Sam Houston State University - College of Business Administration - Department of Economics and International Business

Date Written: November 27, 2008

Abstract

We model the optimal design of programs requiring heterogeneous firms to disclose harmful emissions when disclosure yields both direct and indirect benefits. The indirect benefit arises from the internalization of social costs and resulting reduction in emissions. The direct benefit results from the disclosure of previously private information which is valuable to potentially harmed parties. Previous theoretical and empirical analyses of such programs restrict attention to the former benefit while the stated motivation for such programs highlights the latter benefit. When disclosure yields both direct and indirect benefits, policymakers face a tradeoff between inducing truthful self-reporting and deterring emissions. Internalizing the social costs of emissions, such as through an emissions tax, will deter emissions, but may also reduce incentives for firms to truthfully report their emissions.

Keywords: Pollution control; Environmental regulation; Compliance Self-reporting

JEL Classification: D62; L51; Q58

Suggested Citation

Evans, Mary F. and Gilpatric, Scott M. and Liu, Lirong, Regulation with Direct Benefits of Information Disclosure and Imperfect Monitoring (November 27, 2008). Journal of Environmental Economics and Management, Vol. 57, No. 3, 2009. Available at SSRN: https://ssrn.com/abstract=2550565

Mary F. Evans

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States
909.607.3423 (Phone)

Scott M. Gilpatric

University of Tennessee ( email )

508 Stokely Management Center
Knoxville, TN 37996-0550
United States
865-974-1696 (Phone)

Lirong Liu (Contact Author)

Sam Houston State University - College of Business Administration - Department of Economics and International Business ( email )

SHSU Box 2118
Huntsville, TX 77341-2118
United States

Register to save articles to
your library

Register

Paper statistics

Abstract Views
203
PlumX Metrics