IDEAS home Printed from https://ideas.repec.org/a/cup/endeec/v18y2013i06p723-748_00.html
   My bibliography  Save this article

Monitoring, firms’ compliance and imposition of fines: evidence from the Federal Industrial Inspection Program in Mexico City

Author

Listed:
  • Escobar, Ninel
  • Chávez, Carlos

Abstract

We analyze the performance of the Federal Industrial Inspection Program operated by the Federal Attorney for Environmental Protection (PROFEPA) in Mexico City. We seek to answer three questions: What drives the inspections? What determines non-compliance? And what drives imposition of fines? We use firm-level data that identify certain characteristics of the firms, PROFEPA's inspections, compliance results and fines for all air polluting firms under the Program during the period January 2000–October 2008. We obtain three main results. First, PROFEPA's inspections have focused on larger firms devoted to industrial activities located in poor and dense municipalities. Second, past inspections were significant and have a high marginal effect on compliance. Third, the severity of the infraction was not relevant to the decision to impose a fine but rather to its amount.

Suggested Citation

  • Escobar, Ninel & Chávez, Carlos, 2013. "Monitoring, firms’ compliance and imposition of fines: evidence from the Federal Industrial Inspection Program in Mexico City," Environment and Development Economics, Cambridge University Press, vol. 18(6), pages 723-748, December.
  • Handle: RePEc:cup:endeec:v:18:y:2013:i:06:p:723-748_00
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S1355770X13000338/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Allen Blackman, 2010. "Alternative Pollution Control Policies in Developing Countries," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(2), pages 234-253, Summer.
    2. Shimshack, Jay P. & Ward, Michael B., 2005. "Regulator reputation, enforcement, and environmental compliance," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 519-540, November.
    3. Gray, Wayne B. & Deily, Mary E., 1996. "Compliance and Enforcement: Air Pollution Regulation in the U.S. Steel Industry," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 96-111, July.
    4. Wayne B. Gray & Jay P. Shimshack, 2011. "The Effectiveness of Environmental Monitoring and Enforcement: A Review of the Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 3-24, Winter.
    5. Clifford S. Russell & Philip T. Powell, 1996. "Choosing Environmental Policy Tools: Theoretical Cautions and Practical Considerations," IDB Publications (Working Papers) 25258, Inter-American Development Bank.
    6. Laplante, Benoit & Rilstone, Paul, 1996. "Environmental Inspections and Emissions of the Pulp and Paper Industry in Quebec," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 19-36, July.
    7. Magat, Wesley A & Viscusi, W Kip, 1990. "Effectiveness of the EPA's Regulatory Enforcement: The Case of Industrial Effluent Standards," Journal of Law and Economics, University of Chicago Press, vol. 33(2), pages 331-360, October.
    8. Coria, Jessica & Sterner, Thomas, 2008. "Tradable Permits in Developing Countries: Evidence from Air Pollution in Santiago, Chile," RFF Working Paper Series dp-08-51, Resources for the Future.
    9. Dasgupta, Susmita & Hettige, Hemamala & Wheeler, David, 2000. "What Improves Environmental Compliance? Evidence from Mexican Industry," Journal of Environmental Economics and Management, Elsevier, vol. 39(1), pages 39-66, January.
    10. Eskeland, Gunnar S & Jimenez, Emmanuel, 1992. "Policy Instruments for Pollution Control in Developing Countries," The World Bank Research Observer, World Bank, vol. 7(2), pages 145-169, July.
    11. Caffera, Marcelo, 2011. "The use of economic instruments for pollution control in Latin America: lessons for future policy design," Environment and Development Economics, Cambridge University Press, vol. 16(3), pages 247-273, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Carol Luengo & Marcelo Caffera & Carlos Chávez, 2014. "Uncertain Penalties and Compliance," Documentos de Trabajo/Working Papers 1407, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
    2. Lopamudra Chakraborti & Michael Margolis, 2017. "Do industries pollute more in poorer neighborhoods? Evidence from toxic releasing plants in Mexico," Economics Bulletin, AccessEcon, vol. 37(2), pages 853-870.
    3. Guoyou Qi & Hailiang Zou & Xuemei Xie, 2020. "Governmental inspection and green innovation: Examining the role of environmental capability and institutional development," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(4), pages 1774-1785, July.
    4. Chakraborti, Lopamudra, 2020. "Regulator Reputation Effects in Developing Countries: Evidence from the Toxics Pollution Registry of Mexico," MPRA Paper 104580, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Júlia Gallego Ziero Uhr & André Luis Squarize Chagas, Daniel de Abreu Pereira Uhr, Renan Porn Peres, 2017. "A study on environmental infractions for Brazilian municipalities: a spatial dynamic panel approach," Working Papers, Department of Economics 2017_13, University of São Paulo (FEA-USP).
    2. Alm, James & Shimshack, Jay, 2014. "Environmental Enforcement and Compliance: Lessons from Pollution, Safety, and Tax Settings," Foundations and Trends(R) in Microeconomics, now publishers, vol. 10(4), pages 209-274, December.
    3. Lucija Muehlenbachs & Stefan Staubli & Mark A. Cohen, 2016. "The Impact of Team Inspections on Enforcement and Deterrence," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(1), pages 159-204.
    4. Earnhart, Dietrich & Friesen, Lana, 2017. "The Effects of Regulated Facilities' Perceptions About the Effectiveness of Government Interventions on Environmental Compliance," Ecological Economics, Elsevier, vol. 142(C), pages 282-294.
    5. Shimshack, Jay P. & Ward, Michael B., 2022. "Costly sanctions and the treatment of frequent violators in regulatory settings," Journal of Environmental Economics and Management, Elsevier, vol. 116(C).
    6. Lirong Liu & Zhou Yang, 2020. "Leveraged enforcement under the EPA’s High Priority Violation Policy," Empirical Economics, Springer, vol. 58(3), pages 1279-1304, March.
    7. Anna Rita Germani & Pasquale Scaramozzino & Andrea Morone & Piergiuseppe Morone, 2017. "Discretionary enforcement and strategic interactions between enforcement agencies and firms: a theoretical and laboratory investigation," Journal of Regulatory Economics, Springer, vol. 52(3), pages 255-284, December.
    8. Markus Kitzmueller & Jay Shimshack, 2012. "Economic Perspectives on Corporate Social Responsibility," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 51-84, March.
    9. Stafford Sarah L, 2006. "Rational or Confused Polluters? Evidence from Hazardous Waste Compliance," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-33, July.
    10. Gupta, Shreekant & Saksena, Shalini & Baris, Omer F., 2019. "Environmental enforcement and compliance in developing countries: Evidence from India," World Development, Elsevier, vol. 117(C), pages 313-327.
    11. Khanna Madhu & Widyawati Diah, 2011. "Fostering Regulatory Compliance: The Role of Environmental Self-Auditing and Audit Policies," Review of Law & Economics, De Gruyter, vol. 7(1), pages 125-160, May.
    12. Jinghui Lim, 2016. "The impact of monitoring and enforcement on air pollutant emissions," Journal of Regulatory Economics, Springer, vol. 49(2), pages 203-222, April.
    13. Holstein, Fredrik & Gren, Ing-Marie, 2013. "Violation of environmental regulations in Sweden: Economic motives, environmental attitudes, and social capital," Working Paper Series 2013:3, Swedish University of Agricultural Sciences, Department Economics.
    14. Ujjayant Chakravorty & Céline Nauges & Henry Thille, 2012. "Gasoline Content Regulation and Compliance among US Refineries," CESifo Working Paper Series 3978, CESifo.
    15. Louie Rivers & Tamara Dempsey & Jade Mitchell & Carole Gibbs, 2015. "Environmental Regulation and Enforcement: Structures, Processes and the Use of Data for Fraud Detection," Journal of Environmental Assessment Policy and Management (JEAPM), World Scientific Publishing Co. Pte. Ltd., vol. 17(04), pages 1-29, December.
    16. Zach Raff & Dietrich Earnhart, 2020. "The effect of environmental enforcement on labor: environmental workers and production workers," Journal of Regulatory Economics, Springer, vol. 57(2), pages 118-133, April.
    17. André, Francisco J. & Sokri, Abderrahmane & Zaccour, Georges, 2011. "Public Disclosure Programs vs. traditional approaches for environmental regulation: Green goodwill and the policies of the firm," European Journal of Operational Research, Elsevier, vol. 212(1), pages 199-212, July.
    18. Earnhart, Dietrich & Segerson, Kathleen, 2012. "The influence of financial status on the effectiveness of environmental enforcement," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 670-684.
    19. Zach Raff & Dietrich Earnhart, 2018. "Effect Of Cooperative Enforcement Strategies On Wastewater Management," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 1357-1379, April.
    20. Shimshack, Jay P. & Ward, Michael B., 2008. "Enforcement and over-compliance," Journal of Environmental Economics and Management, Elsevier, vol. 55(1), pages 90-105, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:endeec:v:18:y:2013:i:06:p:723-748_00. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/ede .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.