Using Economic Incentives to Regulate Toxic Substances

manner in which deposits or premiums are set and by the association of refunds with measurable performance. The risks associated with these uncertainties are largely shifted to the producers. Because of limited information, difficulties in the estimation of damages would remain, however; thus, periodic administrative reviews would be necessary to resolve the required level of deposits. Particularly with long-lived products, it could be hard for firms to establish the absence of potential damages. A less ambitious program that links deposits and refunds to the meeting of very specific and measurable criteria would seem more practical than the alternative in which the deposits are intended to fully cover estimated damages.

And, finally, the link between the pool of deposits and the actual liability for damages is also of concern. Costanza and Perrings ( 1990) envision the pool of deposits as a source of funds for the remediation of environmental damages or for compensation to injured parties. A key question, however, is whether the easy availability of a pool of deposits might encourage excessive liability judgments in the repair of environmental damages.

Bohm, Peter, and Clifford S. Russell. 1985. "Comparative Analysis of Alternative Policy Instruments." Pp. 395-433 in Allen V. Kneese and James L. Sweeney , eds., Handbook of Natural Resources and Energy Economics ( New York, NY: North-Holland).

Buser, Hans-Rudolf. 1986. "Polybrominated Dibenzofurans and Dibenzo-p- dioxins: Thermal Reaction Products of Polybrominated Diphenyl Ether Flame Retardants." Journal of Environmental Science and Technology, vol. 20, no. 4, pp. 404-408.

Costanza, Robert, and Charles Perrings. 1990. "A Flexible Assurance Bonding System for Improved Environmental Management." Ecological Economics, vol. 2, no. 1 (April), pp. 57-75.

Chemical Products Corporation. 1987. "Chemical Products Synopsis: Bromine" ( Cortland, NY).

Cullis, C. F. 1988. "The Use of Bromine Compounds as Flame Retardants." Pp. 301-331 in D. Price, B. Iddon, and B. J. Wakefield, eds., Bromine Compounds: Chemistry and Applications ( Amsterdam: Elsevier).

Dick, John S. 1987. Compounding Materials for the Polymer Industries: A Concise Guide to Polymers, Rubbers, Adhesives, and Coatings (Park Ridge, NJ: Noyes Publications).

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