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Ambient environmental monitoring, sequential firm inspections and time-decreasing benefits of inspection

Author

Listed:
  • Laurent Franckx

    (Royal Military Academy and Center for Economic Studies, Catholic University of Leuven)

Abstract

We consider an environmental enforcement agency who uses the measurement of ambient pollution to guide its inspections of individual polluters. We compare two different uses of this information. In a first model, the agency uses a ``threshold strategy": if ambient pollution exceeds an endogenous threshold, the agency inspects all individual polluters simultaneously. In a second model, the agency inspects polluters sequentially, and s its beliefs with respect to the firms' behavior after each firm inspection. If the cost of delaying the inspection of noncompliant firms is low enough, this sequential inspection policy is superior to a simultaneous inspection policy. However, if the cost of delay is high, the agency is better off if it commits itself to ignoring some information embedded in ambient pollution.

Suggested Citation

  • Laurent Franckx, 2001. "Ambient environmental monitoring, sequential firm inspections and time-decreasing benefits of inspection," Economics Bulletin, AccessEcon, vol. 17(1), pages 1-10.
    • Handle: RePEc:ebl:ecbull:eb-01q20001
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    Cited by:

    1. Germani, Anna Rita & Morone, Andrea & Morone, Piergiuseppe & Scaramozzino, Pasquale, 2013. "Discretionary enforcement and strategic interactions between firms, regulatory agency and justice department: a theoretical and empirical investigation," MPRA Paper 51369, University Library of Munich, Germany.
    2. Anna Rita Germani & Pasquale Scaramozzino & Andrea Morone & Piergiuseppe Morone, 2017. "Discretionary enforcement and strategic interactions between enforcement agencies and firms: a theoretical and laboratory investigation," Journal of Regulatory Economics, Springer, vol. 52(3), pages 255-284, December.
    3. Colson, Gregory & Menapace, Luisa, 2012. "Multiple receptor ambient monitoring and firm compliance with environmental taxes under budget and target driven regulatory missions," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 390-401.
    4. Laurent Franckx, 2004. "Marginal Deterrence Through Ambient Environmental Inspections," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(4), pages 507-527, September.

    More about this item

    Keywords

    environmental enforcement ambient monitoring sequential inspection policy;

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • K2 - Law and Economics - - Regulation and Business Law

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