The Impact of Industry Structure and Penalty Policies on Incentives for Compliance and Regulatory Enforcement

Kelly Kristen Lear and John Maxwell
Authors registered in the RePEc Author Service: Kelly Lear Nordby

Journal of Regulatory Economics, 1998, vol. 14, issue 2, 127-48

Abstract: This paper examines the optimal fine for violations of environmental regulations, taking into account financial constraints facing regulated firms and the hierarchical structure of regulatory enforcement. Contrary to the existing literature, which suggests that maximal fines are sub-optimal, we find that the optimal fine is either the maximum amount the firm can afford to pay or zero (i.e., no regulation). The impact of a change in industry structure on the optimal fine, firm compliance and regulatory resource strategies is considered. We identify conditions under which the equilibrium level of regulatory resources decreases with an increase in the number of firms in the industry. Copyright 1998 by Kluwer Academic Publishers

Date: 1998
References: Add references at CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://journals.kluweronline.com/issn/0922-680X/contents link to full text (text/html)
Access to full text is restricted to subscribers.

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:kap:regeco:v:14:y:1998:i:2:p:127-48

Ordering information: This journal article can be ordered from
http://www.springer. ... on/journal/11149/PS2

Access Statistics for this article

Journal of Regulatory Economics is currently edited by Menaham Spiegel

More articles in Journal of Regulatory Economics from Springer
Bibliographic data for series maintained by Sonal Shukla (sonal.shukla@springer.com) and Springer Nature Abstracting and Indexing (indexing@springernature.com).