MARGINAL DETERRENCE THROUGH AMBIENT ENVIRONMENTAL INSPECTIONS

Laurent Franckx

Scottish Journal of Political Economy, 2004, vol. 51, issue 4, 507-527

Abstract: We consider the enforcement of an environmental standard if the probabilities of inspection are determined by an inspection agency who permanently monitors ambient pollution. This monitoring creates strategic interactions between polluters, which imply that the probability of inspection is increasing in the transgression level. These interactions also imply that marginal deterrence is possible, even with penalties that are not increasing in the transgression levels.

Date: 2004
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