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Differential treatment of intentional and accidental violators

Listed author(s):
  • Thomas BLONDIAU
  • Sandra ROUSSEAU

We investigate whether environmental sanctions should increase with the degree of intentionality of the violation. To this end we develop a simple model which is used to make predictions concerning the effect of the degree of intentionality, the amount of illegal gain obtained and the harm caused by the offense on the level of the optimal fine. These predictions are then used to learn more about the objectives pursued by enforcing authorities. We empirically test our theoretical predictions for firms as well as individuals using data on criminal environmental sanctions in Flanders and administrative environmental fines in Brussels. We find that judges and administrative officers aim at a mixture of social welfare maximization and regulation compliance maximization. Also, we find that in practice intentionality of a violation is always a factor which makes the sanction level increase. This is in contrast to a result from our theoretical analysis, in which we demonstrate that more intentional violations can lead to lower optimal fines.

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Paper provided by KU Leuven, Faculty of Economics and Business, Department of Economics in its series Working Papers Department of Economics with number ces11.01.

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Date of creation: Feb 2011
Handle: RePEc:ete:ceswps:ces11.01
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