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A dissolving paradox: Firms’ compliance to environmental regulation

Author

Listed:
  • Nyborg, Karine

    () (Ragnar Frisch Centre for Economic Research,)

  • Telle, Kjetil

    () (Statistics Norway)

Abstract

It has often been claimed that firms’ compliance to environmental regulations is higher than predicted by standard theory, a result labeled the “Harrington paradox” in the literature. Enforcement data from Norway presented here appears, at first glance, to confirm this “stylized fact”: Firms are inspected less than once a year, detected violators are seldom fined, but still, serious violations seem relatively rare. However, at a closer look, the paradox dissolves: Enforcement of minor violations is lax, but such violations do flourish; serious violations are more uncommon, but such violations are subject to credible threats of harsh punishment. This seems quite consistent with predictions from standard theory. Although our finding may of course apply to Norway only, we argue that the empirical existence of the Harrington paradox is not well documented in the literature. Hence, the claim that firms’ compliance with environmental regulations is higher than predicted by standard theory should be viewed with skepticism.

Suggested Citation

  • Nyborg, Karine & Telle, Kjetil, 2004. "A dissolving paradox: Firms’ compliance to environmental regulation," Memorandum 02/2004, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2004_002
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    File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2004/Memo-02-2004.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Kjetil Telle, 2004. "Effects of inspections on plants' regulatory and environmental performance - evidence from Norwegian manufacturing industries," Discussion Papers 381, Statistics Norway, Research Department.
    2. 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.
    3. Kjetil Telle & Jan Larsson, 2004. "Do environmental regulations hamper productivity growth? How accounting for improvements of firms' environmental performance can change the conclusion," Discussion Papers 374, Statistics Norway, Research Department.

    More about this item

    Keywords

    Environmental performance; compliance; enforcement; Harrington paradox;

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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