Environmental enforcement with endogenous ambient monitoring
Data
01.01.2002
01.01.2002
Autori
Laurent Franckx
Codice JEL
K42,Q20
K42,Q20
Parole chiave:
environmental enforcement,ambient inspections,commitment
environmental enforcement,ambient inspections,commitment
Publisher
Climate Change and Sustainable Development
Climate Change and Sustainable Development
Editor
Carlo Carraro
Carlo Carraro
We consider an inspection game between $n$ polluting firms and an environmental enforcement agency. If the cost of monitoring ambient pollution is low enough, the optimal inspection policy consists in imposing the maximal possible fine, and mixing between observing ambient pollution and not conducting any inspection at all. However, with stringent upper limits on the fine, the agency mixes between observing ambient pollution and inspecting all firms. The observation of ambient pollution is always followed by sequentially rational firm inspections. Comparisons with Franckx (2002a,2002b) show that commitment power has a very strong impact on the value of prior information.