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A Standard-Setting Agency and Environmental Enforcement

  • William S. Neilson

    ()

    (Department of Economics, Texas A & M University)

  • Geum Soo Kim

    (Department of Economics, Hoseo University)

This paper considers an environmental regulatory agency that sets both the emissions standard and the enforcement parameters in contrast to the usual treatment in which the agency sets only one of the two. It is shown that if the agency’s budget is sufficiently small, it sets the strictest possible standard and adopts a policy that minimizes noncompliance with that standard, thus legitimizing the literature that assumes this behavior on the part of the agency. In contrast, if the budget is sufficiently large, the agency can obtain its unconstrained optimum, but this optimum has too little pollution from a social perspective.

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Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 67 (2001)
Issue (Month): 3 (January)
Pages: 757-763

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Handle: RePEc:sej:ancoec:v:67:3:y:2001:p:757-763
Contact details of provider: Web page: http://www.southerneconomic.org/
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