Chapter 7. Mechanism Design for the Environment We argue that when externalities such as pollution are nonexcludable agents must be compelled to participate in a “mechanism” to ensure a Pareto efficient outcome. We survey some of the main findings of the mechanism design (implementation theory) literature – such as the Nash implementation theorem the Gibbard–Satterthwaite theorem the Vickrey–Clarke–Groves mechanism and the Arrow d’Aspremont–Gerard–Varet mechanism – and consider their implications for the environment in particular the reduction of aggregate emissions of pollution. We consider the cases of both complete and incomplete information.