Pollution abatement with limited enforcement power and citizen suits

Federal environmental laws in the U.S. can be enforced by government agencies or by private parties through citizen suits against polluters. Here, I extend the standard enforcement model to examine the role played by citizen suits. The main results from the paper suggest that in a model with limited enforcement power and citizen suits the regulator fully exercises his enforcement power when the expected penalty from a citizen suit is low, but increases his reliance on citizen suits as the expected penalty rises. Whether an enforcement regime that allows private enforcement is efficient depends not only on the relative costs of private and agency enforcement, but also on the changes in inspection costs that may be caused by private enforcement and the expected penalty from losing a citizen suit. These results suggest that in practice private enforcement may lower social costs as long as relatively inexpensive agency enforcement options, such as administrative proceedings, do not preclude citizen suits. Copyright Springer Science+Business Media, LLC 2007