HOW TO COMPLY WITH ENVIRONMENTAL REGULATIONS? THE ROLE OF INFORMATION

Anabela Botelho, Lígia M. Costa Pinto and Isabel Rodrigues

Contemporary Economic Policy, 2005, vol. 23, issue 4, 568-577

Abstract: The effectiveness of environmental regulation can be viewed as conditioned by the action of two main agents: regulated firms and public agency. Using a questionnaire on the pulp and paper industry in Portugal, this article finds that firms' decision to comply with environmental regulations is strongly influenced by firms' information on its legal obligations; this effect is stronger for smaller firms. Moreover larger/younger firms are less likely to comply with environmental regulations than smaller/older firms. Regarding the public agency's behavior, the authors find that greater monitoring efforts are directed toward larger/younger firms and toward those firms most likely to cause higher pollution levels. (JEL K32, Q28)

Date: 2005
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