Does the structure of the fine matter?
AbstractWe study individual compliance behavior with respect to a legal norm in an experimental setting under two different regulatory instruments: emission standards and tradable pollution permits. Compliance to the same set of standards and expected permit holdings was induced with different structures of the fine schedule, namely: a linear and a strictly convex penalty function. Even though our design induces perfect compliance, we find that there are violations in both emissions standards and tradable permits systems, regardless of the penalty structure. Nevertheless, the extent of violations is affected by the penalty parameters under emissions standards, but not under a tradable pollution permits. Notwithstanding, we find that the penalty design has an effect on the average price of permits traded, its dispersion and the number of trades.
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Bibliographic InfoPaper provided by Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo. in its series Documentos de Trabajo/Working Papers with number 1305.
Date of creation: 2013
Date of revision:
Environmental policy; enforcement; penalty structure; emissions standards; emissions trading; laboratory experiments;
Find related papers by JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-08-31 (Agricultural Economics)
- NEP-ALL-2013-08-31 (All new papers)
- NEP-ENE-2013-08-31 (Energy Economics)
- NEP-ENV-2013-08-31 (Environmental Economics)
- NEP-EXP-2013-08-31 (Experimental Economics)
- NEP-REG-2013-08-31 (Regulation)
- NEP-RES-2013-08-31 (Resource Economics)
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