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Effects of inspections on plants' regulatory and environmental performance - evidence from Norwegian manufacturing industries

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Abstract

The present paper investigates effects of regulatory inspections on compliance and emissions of energy intensive manufacturing plants in Norway. The regression analysis shows that increased probability of inspection reduces the probability of violation. This is in line with previous studies, and may appear as an encouraging evaluation of the practiced regulatory enforcement policy. However, the direct environmental impact of the enforcement policy is more dubious: Regression analyses reveal a positive relationship between the probability of an inspection and emissions. It appears puzzeling that increased probability of inspection can yield both reduced probability of violation and higher emissions. The possibility that such a puzzle evolves from incentives inherent in the practiced regulatory policy is discussed.

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  • Kjetil Telle, 2004. "Effects of inspections on plants' regulatory and environmental performance - evidence from Norwegian manufacturing industries," Discussion Papers 381, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:381
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    File URL: http://www.ssb.no/a/publikasjoner/pdf/DP/dp381.pdf
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    References listed on IDEAS

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    1. 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.
    2. Magat, Wesley A & Viscusi, W Kip, 1990. "Effectiveness of the EPA's Regulatory Enforcement: The Case of Industrial Effluent Standards," Journal of Law and Economics, University of Chicago Press, vol. 33(2), pages 331-360, October.
    3. Harrington, Winston, 1988. "Enforcement leverage when penalties are restricted," Journal of Public Economics, Elsevier, pages 29-53.
    4. Nyborg, Karine & Telle, Kjetil, 2004. "The role of warnings in regulation: keeping control with less punishment," Journal of Public Economics, Elsevier, pages 2801-2816.
    5. Nyborg, Karine & Telle, Kjetil, 2004. "A dissolving paradox: Firms’ compliance to environmental regulation," Memorandum 02/2004, Oslo University, Department of Economics.
    6. 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.
    7. Murphy, Kevin M & Topel, Robert H, 2002. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 88-97, January.
    8. Hsiao, C., 1992. "Logit and Probit Models," Papers 9210, Southern California - Department of Economics.
    9. Anthony Heyes, 1994. "Environmental enforcement when ‘inspectability’ is endogenous: A model with overshooting properties," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 479-494.
    10. Heyes, Anthony G, 1998. "Making Things Stick: Enforcement and Compliance," Oxford Review of Economic Policy, Oxford University Press, vol. 14(4), pages 50-63, Winter.
    11. 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.
    12. Arellano, Manuel & Honore, Bo, 2001. "Panel data models: some recent developments," Handbook of Econometrics,in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 53, pages 3229-3296 Elsevier.
    13. Dasgupta, Susmita & Laplante, Benoit & Mamingi, Nlandu & Wang, Hua, 2001. "Inspections, pollution prices, and environmental performance: evidence from China," Ecological Economics, Elsevier, vol. 36(3), pages 487-498, March.
    14. Nyborg, Karine & Telle, Kjetil, 2004. "The role of warnings in regulation: keeping control with less punishment," Journal of Public Economics, Elsevier, pages 2801-2816.
    15. Dietrich Earnhart, 2004. "Panel Data Analysis of Regulatory Factors Shaping Environmental Performance," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 391-401, February.
    16. Nadeau, Louis W., 1997. "EPA Effectiveness at Reducing the Duration of Plant-Level Noncompliance," Journal of Environmental Economics and Management, Elsevier, vol. 34(1), pages 54-78, September.
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    Cited by:

    1. Marit E. Klemetsen & Brita Bye & Arvid Raknerud, 2013. "Can non-market regulations spur innovations in environmental technologies? A study on firm level patenting," Discussion Papers 754, Statistics Norway, Research Department.
    2. Suurmond, Guido, 2007. "The effects of the enforcement strategy," MPRA Paper 21142, University Library of Munich, Germany.

    More about this item

    Keywords

    Environmental regulations; regulatory enforcement; inspections; emissions;

    JEL classification:

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

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