How do information asymmetries affect environmental markets?

How do information asymmetries affect environmental markets?

• A. Regulation and transparency can mitigate information asymmetries, but some uncertainty remains.
• B. Buyers and sellers lack full information, causing adverse selection and moral hazard; regulation and transparency can mitigate.
• C. They always improve market efficiency.
• D. They are irrelevant to policy design.

Answer: (B)