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Environmental Management Responses to Punishment: Specific Deterrence and Certainty versus Severity of Punishment

According to the standard model of enforcement, both the certainty of punishment and the severity of punishment influence deterrence. Discerning the separate effects of these two components on behavior, however, is difficult especially because it requires constructing measures of the beliefs of individuals and regulated businesses. Our study tackles this matter using stated choice scenarios posed to environmental management professionals working at businesses operating within the Clean Water Act regulatory framework. In addition, our study examines the influence of specific deterrence, which reflects individuals’ responses to their own experiences with penalties. As important, our analysis explores the attitudes towards environmental protection held by facility management and facility environmental employees, which collectively reflect the corporate culture surrounding environmental protection efforts. We find that regulated facilities respond to increases in fine size and fine likelihood with equal sensitivity and that both specific deterrence and corporate culture are important determinants of compliance behavior.

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Paper provided by School of Economics, University of Queensland, Australia in its series Discussion Papers Series with number 463.

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Date of creation: 2012
Date of revision:
Handle: RePEc:qld:uq2004:463
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  1. A. Mitchell Polinsky & Steven Shavell, 1999. "The Economic Theory of Public Enforcement of Law," NBER Working Papers 6993, National Bureau of Economic Research, Inc.
  2. Alm, James & Jackson, Betty R. & McKee, Michael, 2009. "Getting the word out: Enforcement information dissemination and compliance behavior," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 392-402, April.
  3. Kaplow, Louis, 1990. "Optimal Deterrence, Uninformed Individuals, and Acquiring Information about Whether Acts Are Subject to Sanctions," Journal of Law, Economics and Organization, Oxford University Press, vol. 6(1), pages 93-128, Spring.
  4. Lance Lochner, 2005. "Individual Perceptions of the Criminal Justice System," 2005 Meeting Papers 452, Society for Economic Dynamics.
  5. Anton, Wilma Rose Q. & Deltas, George & Khanna, Madhu, 2002. "Incentives for Environmental Self-Regulation and Implications for Environmental Performance," Working Papers 02-0120, University of Illinois at Urbana-Champaign, College of Business.
  6. Nakamura, Masao & Takahashi, Takuya & Vertinsky, Ilan, 2001. "Why Japanese Firms Choose to Certify: A Study of Managerial Responses to Environmental Issues," Journal of Environmental Economics and Management, Elsevier, vol. 42(1), pages 23-52, July.
  7. Block, Michael K & Gerety, Vernon E, 1995. "Some Experimental Evidence on Differences between Student and Prisoner Reactions to Monetary Penalties and Risk," The Journal of Legal Studies, University of Chicago Press, vol. 24(1), pages 123-38, January.
  8. Wayne B. Gray & Jay P. Shimshack, 2011. "The Effectiveness of Environmental Monitoring and Enforcement: A Review of the Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 3-24, Winter.
  9. 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.
  10. Shimshack, Jay P. & Ward, Michael B., 2005. "Regulator reputation, enforcement, and environmental compliance," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 519-540, November.
  11. Arimura, Toshi & Hibiki, Akira & Katayama, Hajime, 2007. "Is a Voluntary Approach an Effective Environmental Policy Instrument? A Case for Environmental Management Systems," Discussion Papers dp-07-31, Resources For the Future.
  12. Harrington, Winston, 1988. "Enforcement leverage when penalties are restricted," Journal of Public Economics, Elsevier, vol. 37(1), pages 29-53, October.
  13. Gray, Wayne B. & Deily, Mary E., 1996. "Compliance and Enforcement: Air Pollution Regulation in the U.S. Steel Industry," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 96-111, July.
  14. Scholz, John T & Gray, Wayne B, 1990. " OSHA Enforcement and Workplace Injuries: A Behavioral Approach to Risk Assessment," Journal of Risk and Uncertainty, Springer, vol. 3(3), pages 283-305, September.
  15. Sah, R.K., 1990. "Social Osmosis And Patterns Of Crime: A Dynamic Economic Analysis," Papers 609, Yale - Economic Growth Center.
  16. Anderson, Lisa R & Stafford, Sarah L, 2003. "Punishment in a Regulatory Setting: Experimental Evidence from the VCM," Journal of Regulatory Economics, Springer, vol. 24(1), pages 91-110, July.
  17. Lana Friesen, 2009. "Certainty of Punishment versus Severity of Punishment- An Experimental Investigation," Discussion Papers Series 400, School of Economics, University of Queensland, Australia.
  18. Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 169.
  19. Earnhart, Dietrich, 2004. "Regulatory factors shaping environmental performance at publicly-owned treatment plants," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 655-681, July.
  20. Nuno Garoupa, 2003. "Behavioral Economic Analysis of Crime: A Critical Review," European Journal of Law and Economics, Springer, vol. 15(1), pages 5-15, January.
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