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Penalty Functions for Environmental Violations: Evidence from Water Quality Enforcement

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  • Oljaca, Neda
  • Keeler, Andrew G
  • Dorfman, Jeffrey

Abstract

We empirically estimate a penalty function for water quality violations of private firms in Georgia. We find that seriousness of infraction and historical compliance records strongly influence penalty levels, while the intentionality of violations and the method of discovery do not. The size of the polluting company is also an important determinant of financial penalties. Overall the results support the plausibility of modeling assumptions used in much of the theoretical enforcement literature but indicate the need for caution in interpreting models that assume penalty amounts are invariant to violation characteristics. Copyright 1998 by Kluwer Academic Publishers

Suggested Citation

  • Oljaca, Neda & Keeler, Andrew G & Dorfman, Jeffrey, 1998. "Penalty Functions for Environmental Violations: Evidence from Water Quality Enforcement," Journal of Regulatory Economics, Springer, vol. 14(3), pages 255-264, November.
  • Handle: RePEc:kap:regeco:v:14:y:1998:i:3:p:255-64
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    Citations

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    Cited by:

    1. Timothy N. Cason & Lata Gangadharan, 2006. "An Experimental Study of Compliance and Leverage in Auditing and Regulatory Enforcement," Economic Inquiry, Western Economic Association International, vol. 44(2), pages 352-366, April.
    2. Gramig, Benjamin M. & Skees, Jerry R. & Black, J. Roy, 2004. "Utilizing Contingent Claims to Improve the Management of CAFOs," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 36(02), August.
    3. Carmen Arguedas, 2008. "To Comply or Not To Comply? Pollution Standard Setting Under Costly Monitoring and Sanctioning," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 41(2), pages 155-168, October.
    4. Heyes, Anthony, 2002. "A Theory of Filtered Enforcement," Journal of Environmental Economics and Management, Elsevier, vol. 43(1), pages 34-46, January.
    5. Takayoshi Shinkuma & Shunsuke Managi, 2012. "Effectiveness of policy against illegal disposal of waste," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(2), pages 123-145, April.
    6. Karpoff, Jonathan M & Lott, John R, Jr & Wehrly, Eric W, 2005. "The Reputational Penalties for Environmental Violations: Empirical Evidence," Journal of Law and Economics, University of Chicago Press, vol. 48(2), pages 653-675, October.
    7. Carmen Arguedas & Eva Camacho & José Zofío, 2010. "Environmental Policy Instruments: Technology Adoption Incentives with Imperfect Compliance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 47(2), pages 261-274, October.
    8. Tauhidur Rahman & Mini Kohli & Sharon Megdal & Satheesh Aradhyula & Jackie Moxley, 2010. "Determinants Of Environmental Noncompliance By Public Water Systems," Contemporary Economic Policy, Western Economic Association International, vol. 28(2), pages 264-274, April.

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