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Effluent Limits, Ambient Quality, and Monitoring

  • Arguedas, Carmen

    ()

    (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)

  • Earnhart, Dietrich

    ()

    (Department of Economics, University of Kansas)

  • Rousseau, Sandra

    ()

    (Center of Economic Studies, K.U.Leuven, Naamsestraat 69, B-3000 Leuven, Belgium,)

Effluent limits are frequently based on a uniform emission standard, which applies to all polluting facilities within a single industry. However, the implementation of many environmental protection laws does not lead to uniform effluent limits due to considerations of local environmental conditions. In this paper, we theoretically examine the relationships among the stringency of effluent limits imposed on individual polluting facilities, environmental protection agencies’ monitoring decisions, and the ambient quality of the local environment. We then extend the theoretical analysis by exploring the establishment of effluent limits when (1) the national emission standard represents only an upper bound on the local issuance of limits and (2) negotiation efforts expended by both regulated polluting facilities and environmentally concerned citizens play a role. We find that the negotiated discharge limit depends on the political weight enjoyed and the negotiation effort costs faced by both citizens and the regulated facility, along with the stringency of the national standard and local ambient quality conditions.

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Paper provided by Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History) in its series Working Papers in Economic Theory with number 2013/08.

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Length: 35 pages
Date of creation: Dec 2013
Date of revision:
Handle: RePEc:uam:wpaper:201308
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  1. Arguedas, Carmen & Rousseau, Sandra, 2009. "A Note on the Complementarity of Uniform Emission Standards and Monitoring Strategies," Working Papers in Economic Theory 2009/06, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
  2. 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.
  3. Fredriksson, Per G., 1997. "The Political Economy of Pollution Taxes in a Small Open Economy," Journal of Environmental Economics and Management, Elsevier, vol. 33(1), pages 44-58, May.
  4. Garvie, Devon & Keeler, Andrew, 1994. "Incomplete enforcement with endogenous regulatory choice," Journal of Public Economics, Elsevier, vol. 55(1), pages 141-162, September.
  5. Jones, Carol Adaire & Scotchmer, Suzanne, 1990. "The social cost of uniform regulatory standards in a hierarchical government," Journal of Environmental Economics and Management, Elsevier, vol. 19(1), pages 61-72, July.
  6. Damania, Richard & Fredriksson, Per G. & List, John A., 2003. "Trade liberalization, corruption, and environmental policy formation: theory and evidence," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 490-512, November.
  7. Michael D. Makowsky & Thomas Stratmann, 2009. "Political Economy at Any Speed: What Determines Traffic Citations?," American Economic Review, American Economic Association, vol. 99(1), pages 509-27, March.
  8. Greenstone, Michael, 2004. "Did the Clean Air Act cause the remarkable decline in sulfur dioxide concentrations?," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 585-611, May.
  9. Saha, Atanu & Poole, Graham, 2000. "The economics of crime and punishment: An analysis of optimal penalty," Economics Letters, Elsevier, vol. 68(2), pages 191-196, August.
  10. Harrington, Winston, 1988. "Enforcement leverage when penalties are restricted," Journal of Public Economics, Elsevier, vol. 37(1), pages 29-53, October.
  11. Lotte Ovaere & Stef Proost & Sandra Rousseau, 2013. "The choice of environmental regulatory enforcement by lobby groups," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 2(3), pages 328-347, November.
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