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Costly sanctions and the treatment of frequent violators in regulatory settings

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  • Shimshack, Jay P.
  • Ward, Michael B.

Abstract

Regulators typically treat frequent violators more harshly. When does such harsh treatment maximize overall compliance? We consider the role of two factors: responsiveness to penalties and costs of sanctions. A novel insight is that maintaining a credible threat of sanction against infrequent violators is relatively cheap because that threat seldom needs to be backed up. In a Clean Water Act application, the marginal sanction deters ten times as many violations when directed at infrequent violators. On net, this difference is due to a sanction cost effect, not because infrequent violators are marginally more responsive to the threat of punishment.

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  • 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).
    • Handle: RePEc:eee:jeeman:v:116:y:2022:i:c:s0095069622000985
    DOI: 10.1016/j.jeem.2022.102745
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    More about this item

    Keywords

    Enforcement; Repeat offender; Compliance; Government expenditures;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law

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