In this paper, we consider a manager of a firm which activity yields positive profits and an environmental risk. He borrows external funds from a bank in order to invest in the production process. To protect against the environmental risk, he makes prevention. This last action is not observable...

This paper deals with the economic and technical impact of the insurance constraint on the optimal insurance contracts. We show that restricting the set of admissible indemnity fucntions to those that do not allow fo indemnities larger than the damage does not invalidate the Pareto-optimality of...

Since CERCLA's legislation in the United States, extending the liability to banks in case of an environmental damage has been the main concern of many studies. Most of them show that this form of regulation cannot reach its two main objectives because it is not possible to simultaneously improve...

The first-order approach, which consists in replacing the incentive compatible constraint by the agent's first order condition, is widely used in agency problems where the principal cannot observe the level of effort chosen by the agent. This substitution is valid with the Monotone Likelihood...

The first-order approach is a technical shortcut widely used in agency problems. The best known set of sufficient conditions for its validity are due to Mirrlees and Rogerson and require that the distribution function is convex in effort and has a likelihood ratio increasing in output. Only one...

We consider a firm under strict liability that must choose between two risky technologies, one being safer but costlier than the other one. The total potential level of damage increases with the level of activity. We show that, under limited liability, technological change is welfare improving...

Through the Water Framework Directive, the European Commission urges its Mem- ber states to reach a level of "good status" of water for 2015. This level can be different from the regional first-best. Neither the supra-regional regulator (European Commission) nor the regional regulator (Member...

This article offers some economic insights for the debate on the reversible geological disposal of radioactive waste. Irreversibility due to large sunk costs, an important degree of fiexibility and several sources of uncertainty are taken into account in the decision process relative to the...