INFORMATION ASYMMETRIES, UNCERTAINTIES, AND CLEANUP DELAYS AT SUPERFUND SITES

Superfund cleanup has been extremely slow. Traditional analysis has ce ntered around reducing negotiation and litigation to expedite the clea nup process. We investigate other factors which provide possible incen tives for delay, namely, discounting, risk aversion, and compensation for off-site damage. We find that liability share plays an essential r ole in PRPs' incentives to delay. Commonly adopted EPA strategies, suc h as negotiating with PRP steering committees and buying out de minimi s PRPs, may also lead to delay. The paper also designs a Bayesian mech anism for information extraction, and finds that the lump-sum transfer mechanism is not always efficient. (C) 1998 Academic Press.