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Environmental Enforcement with Endogenous Ambient Monitoring

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  • Laurent Franckx

Abstract

We consider an inspection game between n polluting firms and an environmental enforcement agency. If the cost of monitoring ambient pollution is low enough, the optimal inspection policy consists in imposing the maximal possible fine, and mixing between observing ambient pollution and not conducting any inspection at all. However, with stringent upper limits on the fine, the agency mixes between observing ambient pollution and inspecting all firms. The observation of ambient pollution is always followed by sequentially rational firm inspections. Comparisons with Franckx (2002a, Journal of Environmental Economics and Management 43, 71–92, 2002b, Topics in Economic Analysis Policy 2(1), Article 1) show that commitment power has a very strong impact on the value of prior information. Copyright Springer 2005

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  • Laurent Franckx, 2005. "Environmental Enforcement with Endogenous Ambient Monitoring," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(2), pages 195-220, February.
    • Handle: RePEc:kap:enreec:v:30:y:2005:i:2:p:195-220
    DOI: 10.1007/s10640-004-1514-3
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    References listed on IDEAS

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    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
    2. Segerson, Kathleen, 1988. "Uncertainty and incentives for nonpoint pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 87-98, March.
    3. Gould, John P., 1974. "Risk, stochastic preference, and the value of information," Journal of Economic Theory, Elsevier, vol. 8(1), pages 64-84, May.
    4. Hess, James, 1982. "Risk and the gain from information," Journal of Economic Theory, Elsevier, vol. 27(1), pages 231-238, June.
    5. Yves Zenou, 2003. "The Spatial Aspects of Crime," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 459-467, 04/05.
    6. Franckx Laurent, 2002. "Ambient environmental inspections and commitment towards enforcement policies: substitutes or complements?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-20, January.
    7. Jeroen C.J.M. van den Bergh (ed.), 1999. "Handbook of Environmental and Resource Economics," Books, Edward Elgar Publishing, number 801.
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    Cited by:

    1. Dijkstra, Bouwe R. & Rübbelke, Dirk T.G., 2013. "Group rewards and individual sanctions in environmental policy," Resource and Energy Economics, Elsevier, vol. 35(1), pages 38-59.
    2. Zhou, Xiaoxiao & Jia, Mengyu & Wang, Lu & Sharma, Gagan Deep & Zhao, Xin & Ma, Xiaowei, 2022. "Modelling and simulation of a four-group evolutionary game model for green innovation stakeholders: Contextual evidence in lens of sustainable development," Renewable Energy, Elsevier, vol. 197(C), pages 500-517.
    3. Colson, Gregory & Menapace, Luisa, 2012. "Multiple receptor ambient monitoring and firm compliance with environmental taxes under budget and target driven regulatory missions," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 390-401.
    4. Deutsch, Yael & Goldberg, Noam & Perlman, Yael, 2019. "Incorporating monitoring technology and on-site inspections into an n-person inspection game," European Journal of Operational Research, Elsevier, vol. 274(2), pages 627-637.
    5. Dong, Xiaoqing & Li, Chaolin & Li, Ji & Wang, Jia & Huang, Wantao, 2010. "A game-theoretic analysis of implementation of cleaner production policies in the Chinese electroplating industry," Resources, Conservation & Recycling, Elsevier, vol. 54(12), pages 1442-1448.
    6. François Cochard & Julie Le Gallo & Laurent Franckx, 2015. "Regulation Of Pollution In The Laboratory: Random Inspections, Ambient Inspections, And Commitment Problems," Bulletin of Economic Research, Wiley Blackwell, vol. 67(S1), pages 40-73, December.

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    More about this item

    Keywords

    ambient monitoring; commitment; environmental enforcement;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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