The use of warnings when intended and measured emissions differ
This article studies the effects of informal, non-monetary sanctions, such as warnings, which are often used as an enforcement instrument by environmental inspection agencies. In cases of uncertainty with respect to the measured emissions due to measurement errors or accidental violations, some firms are unjustly penalised. As warnings provide a buffer period in which the firm is informed about the violation without any monetary consequences, it will be theoretically shown that warnings can help to reduce the welfare cost of such type II-errors and reduce the overdeterrence of low-cost firms - albeit at the cost of underdeterring medium-cost firms.
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- Sandra Rousseau, 2007. "Timing of environmental inspections: survival of the compliant," Journal of Regulatory Economics, Springer, vol. 32(1), pages 17-36, August.
- Steven Shavell & A. Mitchell Polinsky, 2000. "The Economic Theory of Public Enforcement of Law," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 45-76, March.
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- Laplante, Benoit & Rilstone, Paul, 1996. "Environmental Inspections and Emissions of the Pulp and Paper Industry in Quebec," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 19-36, July.
- Nyborg, Karine & Telle, Kjetil, 2004.
"The role of warnings in regulation: keeping control with less punishment,"
Journal of Public Economics,
Elsevier, vol. 88(12), pages 2801-2816, December.
- Nyborg, Karine & Telle, Kjetil, 2003. "The Role of Warnings in Regulation: Keeping Control with Less Punishment," Memorandum 24/2003, Oslo University, Department of Economics.
- Harrington, Winston, 1988. "Enforcement leverage when penalties are restricted," Journal of Public Economics, Elsevier, vol. 37(1), pages 29-53, October.
- Chu, C. Y. Cyrus & Hu, Sheng-cheng & Huang, Ting-yuan, 2000. "Punishing repeat offenders more severely," International Review of Law and Economics, Elsevier, vol. 20(1), pages 127-140, March.
- Stafford, Sarah L., 2002. "The Effect of Punishment on Firm Compliance with Hazardous Waste Regulations," Journal of Environmental Economics and Management, Elsevier, vol. 44(2), pages 290-308, September.
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