An optimal tax/subsidy for output and pollution control under asymmetric information in oligopoly markets

Abstract

This paper constructs an optimal incentive tax/subsidy scheme in an oligopoly market with pollution, as a generalization of the Loeb-Magat scheme, which is nondiscriminatory and requires less information for implementation than the conventional ones. Some interesting properties of the scheme are discussed. © 1993 Kluwer Academic Publishers.