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Compliance Monitoring and Agri-Environmental Policy

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  • Chongwoo Choe
  • Iain Fraser

Abstract

This paper uses an optimal contract approach to examine the issue of compliance monitoring in agri-environmental policy when the farmer is risk neutral and risk averse. The environmental agency chooses monitoring accuracy and payments for farmer's (non-)compliance. With a risk-neutral farmer, an optimal policy involves maximum allowable reward for compliance and maximum allowable penalty for non-compliance.
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Suggested Citation

  • Chongwoo Choe & Iain Fraser, 1999. "Compliance Monitoring and Agri-Environmental Policy," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(3), pages 468-487.
  • Handle: RePEc:bla:jageco:v:50:y:1999:i:3:p:468-487
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    References listed on IDEAS

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    1. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, January.
    2. Laffont, Jean-Jacques, 1994. "The New Economics of Regulation Ten Years After," Econometrica, Econometric Society, pages 507-537.
    3. Uwe Latacz-Lohmann & Carel Van der Hamsvoort, 1997. "Auctioning Conservation Contracts: A Theoretical Analysis and an Application," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 407-418.
    4. Spulber, Daniel F., 1988. "Optimal environmental regulation under asymmetric information," Journal of Public Economics, Elsevier, pages 163-181.
    5. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    6. Bourgeon, Jean-Marc & Jayet, Pierre-Alain & Picard, Pierre, 1995. "An incentive approach to land set-aside programs," European Economic Review, Elsevier, pages 1487-1509.
    7. Andrew Moxey & Ben White, 1994. "Efficient Compliance With Agricultural Nitrate Pollution Standards," Journal of Agricultural Economics, Wiley Blackwell, vol. 45(1), pages 27-37.
    8. Laffont, Jean-Jacques, 1992. "The New Economics of Regulation Ten Years After," IDEI Working Papers 22, Institut d'Économie Industrielle (IDEI), Toulouse.
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