{"title":"Environmental incentives facing private information","authors":"F. Wirl","doi":"10.1017/S1355770X21000048","DOIUrl":null,"url":null,"abstract":"Abstract Environmental incentives are characterized by two distinct features: (1) a benefit-cost trade-off; and (2) private information about the trade-off. This suggests a degree of freedom of where to attach the private information, either to the benefit or the costs, as long as these choices imply the same behavior absent incentives (‘observation equivalent’). However, we show that different observation equivalent specifications can lead to different incentives. This is demonstrated for two cases: rainforest protection and contributions to a public good. Therefore, the choice of a private information parameter must be justified against observation equivalent alternatives.","PeriodicalId":47751,"journal":{"name":"Environment and Development Economics","volume":null,"pages":null},"PeriodicalIF":2.2000,"publicationDate":"2021-03-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1017/S1355770X21000048","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Environment and Development Economics","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1017/S1355770X21000048","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
Abstract Environmental incentives are characterized by two distinct features: (1) a benefit-cost trade-off; and (2) private information about the trade-off. This suggests a degree of freedom of where to attach the private information, either to the benefit or the costs, as long as these choices imply the same behavior absent incentives (‘observation equivalent’). However, we show that different observation equivalent specifications can lead to different incentives. This is demonstrated for two cases: rainforest protection and contributions to a public good. Therefore, the choice of a private information parameter must be justified against observation equivalent alternatives.
期刊介绍：
Environment and Development Economics is positioned at the intersection of environmental, resource and development economics. The Editor and Associate Editors, supported by a distinguished panel of advisors from around the world, aim to encourage submissions from researchers in the field in both developed and developing countries. The Journal is divided into two main sections, Theory and Applications, which includes regular academic papers and Policy Options, which includes papers that may be of interest to the wider policy community. Environment and Development Economics also publishes occasional Policy Fora (discussions based on a focal paper). From time to time the journal publishes special issues based on a particular theme.
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