Regulating Global Externalities

Roweno J.R.K. Heijmans, Reyer Gerlagh

Research output: Working paperDiscussion paperOther research output

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The question in which we are interested is how a market inhabited by multiple
agents, about whom we are differentially uncertain, and who trade goods the use of
which imposes a negative effect on others, is to be ideally regulated. We show that a priori asymmetric uncertainty, when combined with a posteriori observed outcomes, is a rich source of information that can be used to reduce aggregate uncertainty. The observation implies that whereas asymmetric information usually entails a cost on welfare, it can help achieve greater efficiency in regulation.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages22
Publication statusPublished - 10 Jan 2019

Publication series

NameCentER Discussion Paper


  • asymmetric information
  • regulatory instruments
  • policy updating
  • asymmetric uncerntainty
  • decison making under uncertainty


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