 Enforcing regulatory standards in stock pollution problemsCarmen Arguedas, Francisco Cabo and Guiomar Martin-Herran Journal of Environmental Economics and Management, 2020, vol. 100, issue C Abstract: We analyze optimal pollution standards and enforcement strategies in settings where environmental damages depend on accumulated pollution, and enforcement is socially costly. We assume that a regulator and a representative polluting firm interact in a Stackelberg differential game, and we specifically allow the firm to pollute above the limit, and pay the corresponding fine. A crucial element is how progressive the fine is with respect to the degree of non-compliance. Some of our results contradict the related literature on the control of stock pollutants under full-compliance. In particular, we find that setting standards dependent on the pollution stock (setting quantities) is preferred if fines are sufficiently non-linear; while setting fines dependent on the pollution stock (setting prices) is preferred if fines are linear or almost linear, and specially when the environmental problem is particularly harmful. Keywords: Pollution standards; Non-compliance; Dynamic regulation; Stackelberg differential games; Prices versus quantities (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:100:y:2020:i:c:s0095069618305473 DOI: 10.1016/j.jeem.2019.102297 Access Statistics for this article Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates More articles in Journal of Environmental Economics and Management from Elsevier |
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