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An Integrated Strategy to Reduce Monitoring and Enforcement Costs

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  • E. Hentschel
  • A. Randall

Abstract

A policy of effective environmental protection, inthe present political atmosphere, will requirelow-cost monitoring and enforcement (M&E) strategiesthat do not rely on draconian penalties. Infinite oreven very high penalties for environmental violationsare socially and politically unacceptable.Environmental violations are often classed as civiloffenses, and the occurrence of a violation may bethought insufficient to establish intent. If penaltiesare upper-bounded and each firm is inspected randomly,compliance cannot be maintained with arbitrarily smallinspection probabilities and, hence, small agencycosts. In this paper we examine possibilities forreducing agency M&E costs, including the requirementfor self-reports of effluents and the adjustment ofthe inspection probability to reflect a firm'scompliance or reporting reputation. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • E. Hentschel & A. Randall, 2000. "An Integrated Strategy to Reduce Monitoring and Enforcement Costs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 15(1), pages 57-74, January.
  • Handle: RePEc:kap:enreec:v:15:y:2000:i:1:p:57-74
    DOI: 10.1023/A:1008348915460
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    References listed on IDEAS

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    1. Malik Arun S., 1993. "Self-Reporting and the Design of Policies for Regulating Stochastic Pollution," Journal of Environmental Economics and Management, Elsevier, vol. 24(3), pages 241-257, May.
    2. Carol Adaire Jones, 1989. "Standard setting with incomplete enforcement revisited," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 8(1), pages 72-87.
    3. Landsberger, Michael & Meilijson, Isaac, 1982. "Incentive generating state dependent penalty system : The case of income tax evasion," Journal of Public Economics, Elsevier, vol. 19(3), pages 333-352, December.
    4. 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.
    5. Harrington, Winston, 1988. "Enforcement leverage when penalties are restricted," Journal of Public Economics, Elsevier, vol. 37(1), pages 29-53, October.
    6. Harford, Jon D., 1987. "Self-reporting of pollution and the firm's behavior under imperfectly enforceable regulations," Journal of Environmental Economics and Management, Elsevier, vol. 14(3), pages 293-303, September.
    7. Kaplow, Louis & Shavell, Steven, 1994. "Optimal Law Enforcement with Self-Reporting of Behavior," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 583-606, June.
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    Cited by:

    1. Heyes, Anthony & Kapur, Sandeep, 2009. "Enforcement missions: Targets vs budgets," Journal of Environmental Economics and Management, Elsevier, vol. 58(2), pages 129-140, September.
    2. Villegas, Clara & Coria, Jessica, 2009. "Taxes, Permits, and the Adoptation of Abatement Technology under Imperfect Compliance," Discussion Papers dp-09-20-efd, Resources For the Future.
    3. Lars Hansen & Signe Krarup & Clifford Russell, 2006. "Enforcement and Information Strategies," Journal of Regulatory Economics, Springer, vol. 30(1), pages 45-61, July.
    4. Motta, Alberto & Burlando, Alfredo, 2007. "Self reporting reduces corruption in law enforcement," MPRA Paper 5332, University Library of Munich, Germany, revised 23 Jun 2007.
    5. Coria, Jessica & Zhang, Xiao-Bing, 2015. "The Harrington Paradox Squared," Working Papers in Economics 608, University of Gothenburg, Department of Economics.

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    Keywords

    enforcement; reputation; self-reports;

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