Pressure groups and experts in environmental regulation

We study a problem of environmental regulation, where the firm may suffer from a certain degree of ignorance about the damage its activity may cause. In a framework with asymmetric information, we analyze the impact of the presence of informed third-parties on the regulatory process. Studying and comparing the role of environmentalists and of unbiased experts, our analysis allows us to support the spirit of the actual E.U. legislation concerning the assessment of the impact of public and private projects on the environment and provides insights about the potential role of interested parties as information providers in a regulatory process.