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Standard setting with incomplete enforcement revisited

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  • Carol Adaire Jones

Abstract

Many regulatory agencies enforcing quality standards across diverse populations of firms lack sufficient resources to promote full compliance. Based on a model with lump-sum noncompliance penalties, W. Kip Viscusi and Richard J. Zeckhauser have advocated that, in most circumstances, an agency with insufficient enforcement resources should choose a less stringent standard than it would choose if it could induce full compliance. I show that the recommendation for regulatory restraint depends upon the shape of the penalty function. A review of inspection and penalty policies suggests that U.S. administrative law encompasses a diversity of variable expected penalty policies. The inspection and penalty policies employed in recent environmental statutes suggest, however, that agencies should compensate for insufficient resources by increasing the stringency of standards.

Suggested Citation

  • 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.
  • Handle: RePEc:wly:jpamgt:v:8:y:1989:i:1:p:72-87
    DOI: 10.2307/3324425
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    Citations

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    Cited by:

    1. Hutchinson, Emma & Kennedy, Peter W., 2008. "State enforcement of federal standards: Implications for interstate pollution," Resource and Energy Economics, Elsevier, vol. 30(3), pages 316-344, August.
    2. Andrew Keeler, 1995. "Regulatory objectives and enforcement behavior," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 6(1), pages 73-85, July.
    3. Carmen Arguedas & Francisco Cabo & Guiomar Martín-Herrán, 2017. "Optimal Pollution Standards and Non-compliance in a Dynamic Framework," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(3), pages 537-567, November.
    4. Gray, Wayne B. & Shadbegian, R.J.Ronald J., 2004. "'Optimal' pollution abatement--whose benefits matter, and how much?," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 510-534, May.
    5. Liu, Lirong & Neilson, William, 2013. "Enforcement Leverage with Fixed Inspection Capacity," Strategic Behavior and the Environment, now publishers, vol. 3(4), pages 305-328, August.
    6. Jin-Li Hu & Chung-Huang Huang & Wei-Kai Chu, 2004. "Bribery, hierarchical government, and incomplete environmental enforcement," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 6(3), pages 177-196, September.
    7. Hans Gottinger, 1996. "A model of principal-agency control of wastes under technological progress," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 7(3), pages 263-286, April.
    8. Ya-Po Yang & Jin-Li Hu, 2012. "Gresham’s law in environmental protection," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(2), pages 103-122, April.
    9. Ravenswaay, Eileen O. van & Bylenga, Sharon A., 1990. "Enforcing Food Safety Standards: A Case Study of Antibiotic and Sulfa Drug Residues in Veal," Staff Paper Series 201035, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    10. Anthony Heyes, 1994. "Environmental enforcement when ‘inspectability’ is endogenous: A model with overshooting properties," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 4(5), pages 479-494, October.
    11. Carmen Arguedas & Dietrich Earnhart & Sandra Rousseau, 2017. "Non-uniform implementation of uniform standards," Journal of Regulatory Economics, Springer, vol. 51(2), pages 159-183, April.
    12. Garvie, Devon & Keeler, Andrew, 1993. "Incomplete Enforcement with Endogenous Regulatory Choice," Queen's Institute for Economic Research Discussion Papers 275224, Queen's University - Department of Economics.
    13. Arguedas, Carmen, 1999. "Enviromental standards and costly monitoring," UC3M Working papers. Economics 6099, Universidad Carlos III de Madrid. Departamento de Economía.
    14. Keeler, Andrew G., 1990. "Marketable Pollution Permits with Incomplete Enforcement," 1990 Annual meeting, August 5-8, Vancouver, Canada 270918, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. 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.
    16. Harford, Jon D., 2000. "Initial and Continuing Compliance and the Trade-Off between Monitoring and Control Cost," Journal of Environmental Economics and Management, Elsevier, vol. 40(2), pages 151-163, September.
    17. Batabyal, Amitrajeet A., 1995. "Leading issues in domestic environmental regulation: A review essay," Ecological Economics, Elsevier, vol. 12(1), pages 23-39, January.
    18. Sverre Grepperud, 2015. "Optimal safety standards when accident prevention depends upon both firm and worker effort," European Journal of Law and Economics, Springer, vol. 39(3), pages 505-521, June.

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