On Social and Market Sanctions in Deterring non Compliance in Pollution Standards

Philippe Bontems and Gilles Rotillon

No 9974, 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: In this paper, we theoretically explore the implications of social norms in deterring pollution standard fraud along with economic incentives provided both by markets and regulatory activities. The model assumes that a large number of risk-averse individuals differ not only in their private cost of compliance with the environmental standard but also in their individual aversion to fraud. The aversion of fraud is influenced by the extent of social norms. We show that there may be multiple equilibrium rates of compliance for a given enforcement policy. We also show that under risk aversion the potential loss in market revenues has an ambiguous effect on the equilibrium rates of compliance. Similarly, increasing the probability of audit may decrease the equilibrium rate of compliance when stochastic events make unvoluntary non compliance possible. Last, we show that the information brought to the market is crucial for polluters' behavior. For this, we explore the impact of self-reporting procedures and public disclosure of criminal records.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 14
Date: 2007
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/9974/files/sp07bo01.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea07:9974

DOI: 10.22004/ag.econ.9974

Access Statistics for this paper

More papers in 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().