Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/298042 
Year of Publication: 
2024
Series/Report no.: 
Tinbergen Institute Discussion Paper No. TI 2024-035/VIII
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
We take a decentralized approach to regulating 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 coordination on environmental issues.
Subjects: 
Pollution
Decentralization
Smart contracts
Beneficiaries-compensates principle
JEL: 
C72
D62
Q52
H23
Document Type: 
Working Paper

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