Rent Seeking Behavior And Optimal Taxation Of Pollution In Shallow Lakes

In this paper the authors extend earlier work on the economics of shallow lakes by Maler, Xepapadeas and de Zeeuw (2003) to the case where two communities have incommensurable preferences about Lake Eutrophication. In the case of incommensurable preferences interest group behavior arises, they therefore consider the case where society is divided into two interest groups and is thus unable to agree on a single management objective. In particular, the communities that share the use of the lake disagree on the relative importance of the shallow lake acting as a waste sink for phosphorus run-off as opposed to other ecosystem services.