Abstract:*

We take a decentralized approach to managing environmental pollution in settings where each agent's pollution possibly affects all others. There is no central agency to enforce pollution abatement or coordinate monetary transfers. Moreover, agents possess private information, which precludes deducing efficient abatement in general. We propose to implement transfer schemes through smart contracts to allow beneficiaries to compensate for abatement. We characterize all schemes that induce efficient abatement in unique dominant-strategy equilibrium. Moreover, appealing to classical fairness tenets, we pin down the "beneficiaries-compensates principle". Supporting this principle through smart contracts provides a promising step towards decentralized environmental regulation.

*Co-authored with Jens Gudmundsson & Jens Leth Hougaard.

About the SEEMS Seminars

Over the past years the number of researchers at UvA Economics & Business that work on Environmental Economics and Sustainability has increased significantly. To provide a natural meeting place for them, we have started a series of Seminars on Environmental Economics and Management of Sustainability (SEEMS).

The series’ first main goal is to increase the visibility of Environmental Economics and the Management of Sustainability at UvA and the visibility of UvA within these fields. Its second main goal is to give PhD candidates working on topics in these fields access to the frontier of knowledge, and to provide them with a training ground where they can present and discuss their ideas.

Are you interested?

This will be a hybrid seminar. If you are interested in joining this seminar, please send an email to the secretariat of ASF at asf-feb@uva.nl.