Does the structure of the fine matter?
We study individual compliance behavior with respect to a legal norm in an experimental setting under two different regulatory instruments: emission standards and tradable pollution permits. Compliance to the same set of standards and expected permit holdings was induced with different structures of the fine schedule, namely: a linear and a strictly convex penalty function. Even though our design induces perfect compliance, we find that there are violations in both emissions standards and tradable permits systems, regardless of the penalty structure. Nevertheless, the extent of violations is affected by the penalty parameters under emissions standards, but not under a tradable pollution permits. Notwithstanding, we find that the penalty design has an effect on the average price of permits traded, its dispersion and the number of trades.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.um.edu.uy/cee/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
- Dickens, William T., 1986. "Crime and punishment again: The economic approach with a psychological twist," Journal of Public Economics, Elsevier, vol. 30(1), pages 97-107, June.
- Garvie, Devon & Keeler, Andrew, 1994.
"Incomplete enforcement with endogenous regulatory choice,"
Journal of Public Economics,
Elsevier, vol. 55(1), pages 141-162, September.
- Devon Garvie & Andrew Keeler, 1993. "Incomplete Enforcement with Endogenous Regulatory Choice," Working Papers 873, Queen's University, Department of Economics.
- Malik, Arun S, 1992. "Enforcement Costs and the Choice of Policy Instruments for Controlling Pollution," Economic Inquiry, Western Economic Association International, vol. 30(4), pages 714-21, October.
- Murphy, James J. & Stranlund, John K., 2006. "Direct and market effects of enforcing emissions trading programs: An experimental analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 61(2), pages 217-233, October.
- Akerlof, George A & Dickens, William T, 1982. "The Economic Consequences of Cognitive Dissonance," American Economic Review, American Economic Association, vol. 72(3), pages 307-19, June.
- Phillia Restiani & Regina Betz, 2010.
"A Theoretical Model of Optimal Compliance Decisions under Different Penalty Designs in Emissions Trading Markets,"
Environmental Economics Research Hub Research Reports
1086, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University.
- Restiani, Phillia & Betz, Regina, 2010. "A Theoretical Model of Optimal Compliance Decisions under Different Penalty Designs in Emissions Trading Markets," Research Reports 107585, Australian National University, Environmental Economics Research Hub.
- Murphy, James J. & Stranlund, John K., 2007.
"A laboratory investigation of compliance behavior under tradable emissions rights: Implications for targeted enforcement,"
Journal of Environmental Economics and Management,
Elsevier, vol. 53(2), pages 196-212, March.
- James J. Murphy & John K. Stranlund, 2005. "A Laboratory Investigation of Compliance Behavior under Tradable Emissions Rights: Implications for Targeted Enforcement," Working Papers 2005-1, University of Massachusetts Amherst, Department of Resource Economics.
- Heyes, Anthony, 2000. "Implementing Environmental Regulation: Enforcement and Compliance," Journal of Regulatory Economics, Springer, vol. 17(2), pages 107-29, March.
- Marcelo Caffera & Carlos Chávez, 2011. "The Cost-Effective Choice of Policy Instruments to Cap Aggregate Emissions with Costly Enforcement," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 50(4), pages 531-557, December.
- Gary S. Becker, 1974.
"Crime and Punishment: An Economic Approach,"
in: Essays in the Economics of Crime and Punishment, pages 1-54
National Bureau of Economic Research, Inc.
- Boemare, Catherine & Quirion, Philippe, 2002.
"Implementing greenhouse gas trading in Europe: lessons from economic literature and international experiences,"
Elsevier, vol. 43(2-3), pages 213-230, December.
- Catherine Boemare & Philippe Quirion, 2002. "Implementing greenhouse gas trading in Europe: lessons from economic literature and international experiences," Post-Print halshs-00007264, HAL.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
- Harford, Jon D., 1978. "Firm behavior under imperfectly enforceable pollution standards and taxes," Journal of Environmental Economics and Management, Elsevier, vol. 5(1), pages 26-43, March.
- Pencavel, John H., 1979. "A note on income tax evasion, labor supply, and nonlinear tax schedules," Journal of Public Economics, Elsevier, vol. 12(1), pages 115-124, August.
- Malik, Arun S., 1990. "Markets for pollution control when firms are noncompliant," Journal of Environmental Economics and Management, Elsevier, vol. 18(2), pages 97-106, March.
- Stranlund, John K. & Dhanda, Kanwalroop Kathy, 1999. "Endogenous Monitoring and Enforcement of a Transferable Emissions Permit System," Journal of Environmental Economics and Management, Elsevier, vol. 38(3), pages 267-282, November.
- Ricardo J. Rodriguez, 1990. "Penalty Schedules and the Optimal Speed Limit," Eastern Economic Journal, Eastern Economic Association, vol. 16(1), pages 59-64, Jan-Mar.
- Arguedas, Carmen, 2007.
"To Comply or Not To Comply? Pollution Standard Setting Under Costly Monitoring and Sanctioning,"
Working Papers in Economic Theory
2007/13, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
- Carmen Arguedas, 2008. "To Comply or Not To Comply? Pollution Standard Setting Under Costly Monitoring and Sanctioning," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 41(2), pages 155-168, October.
When requesting a correction, please mention this item's handle: RePEc:mnt:wpaper:1305. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Juan José Irisarri)
If references are entirely missing, you can add them using this form.