MULTIPLE AGENTS, AND AGRICULTURAL NONPOINT-SOURCE WATER POLLUTION CONTROL POLICIES

Assuming asymmetric information over farmer profits and zero transaction costs, prior literature has suggested that when regulating nonpoint source water pollution, a tax on management practices (inputs) can implement full-information allocations and is superior to a tax on estimated runoff. Using mechanism design theory under asymmetric information, this paper show that under the same assumptions, management practice taxes and taxes on estimated runoff are equally efficient