Using a formal political economy model with incomplete information regarding the accident preventing activities chosen by the firm (moral hazard) under limited liability, we illustrate different conditions under which an environmental protection system based on extending liability to private...

We address in this paper the problem of comparing and choosing among different policy instruments to implement the incentive objective of an efficient deterrence of environmental degradation and the remedy objective of an efficient clean-up of damages and a proper compensation of victims. Two...

This paper makes some steps toward a formal political economy of environmental policy. Economists' quasi-unanimous preferences for sophisticated incentive regulation is reconsidered. First, we recast the question of instrument choice in the general mechanism literature and provide an incomplete...