It has often been claimed that firms’ compliance to environmental regulations is higher than predicted by standard theory, a result labeled the “Harrington paradox” in the literature. Enforcement data from Norway presented here appears, at first glance, to confirm this “stylized fact”: Firms are inspected less than once a year, detected violators are seldom fined, but still, serious violations seem relatively rare. However, at a closer look, the paradox dissolves: Enforcement of minor violations is lax, but such violations do flourish; serious violations are more uncommon, but such violations are subject to credible threats of harsh punishment. This seems quite consistent with predictions from standard theory. Although our finding may of course apply to Norway only, we argue that the empirical existence of the Harrington paradox is not well documented in the literature. Hence, the claim that firms’ compliance with environmental regulations is higher than predicted by standard theory should be viewed with skepticism.
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Paper provided by Oslo University, Department of Economics in its series Memorandum with number
02/2004.
Length: 30 pages Date of creation: 04 Feb 2004 Date of revision: Publication status: Published in Environmental and Resource Economics, 2006, pages 1-18. Handle: RePEc:hhs:osloec:2004_002
Find related papers by JEL classification: K32 - Law and Economics - - Other Substantive Areas of Law - - - Environmental, Health, and Safety Law K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
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