Cost-effective and stochastic dominance approaches to stochastic pollutioncontrol

Most economic studies of pollution externalities focus on the relative effi ciency or cost-effectiveness of alternative pollution control instruments. Much less attention has been paid to policy goals and objectives. However, a comprehensive pollution control strategy depends on all of these choices. This paper examines several efficiency properties of cost-effective pollut ion control strategies in a stochastic setting when economic damages from p ollution are unknown. A number of policy goals are considered. In this sett ing and under a primal approach, it is found that certain stochastic domina nce conditions must be satisfied for the strategies to exhibit desirable ef ficiency properties. A dual approach to cost-effective pollution control, w hich is based on a stochastic dominance objective, is also considered.