Using markets to allocate pollution permits and other scarce resource rights under limited information

Journal Article (Journal Article)

We consider the design of government policy to ration such scarce resources as water or pollution permits in the presence of limited information. When government policy is formulated, some informed agents (e.g. established public utilities) know how highly they value the resource. Other uninformed agents (e.g. potential independent power producers) only learn their valuations at some later date. The government allows uninformed agents to trade the resource rights they receive on a competitive market. Informed agents may or may not have the same privilege. The optimal initial distribution of resource rights differs significantly according to whether informed agents can trade the rights they receive. © 1995.

Full Text

Duke Authors

Cited Authors

  • Lewis, TR; Sappington, DEM

Published Date

  • January 1, 1995

Published In

Volume / Issue

  • 57 / 3

Start / End Page

  • 431 - 455

International Standard Serial Number (ISSN)

  • 0047-2727

Digital Object Identifier (DOI)

  • 10.1016/0047-2727(95)80005-T

Citation Source

  • Scopus