Edited by John A. List and Michael K. Price
Chapter 15: Incentive compatible mechanisms for providing environmental public goods
Determining the appropriate level of pollution reduction, open space to provide, or what policies to implement to protect an endangered species (or even whether to list a given species as endangered) requires information about the benefits from these environmental policy changes. In addition to quantifying the potential effects of these policies on such things as property values and human health, it is often necessary for economists to know how changes in environmental public policies or goods make consumers better (or worse) off as a result of the fact that consumers value these goods or programs in their own right. Economists require information about the demand for environmental public goods in order to make appropriate assessments of the costs and benefits of alternative environmental policy programs. The experimental economics literature contains numerous approaches to the problem of determining the demand for a public good. Ledyard (1995) summarizes these results. Public goods experiments in which players are asked to make a contribution to a group good typically result in high levels of contribution in early rounds of decision-making and deteriorate to zero contribution relatively quickly.
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