Compliance, Avoidance, and Evasion: Emissions Control Under Imperfect Enforcement in Steam-Electric Generation

Dan A. Fuller

RAND Journal of Economics, 1987, vol. 18, issue 1, 124-137

Abstract: Environmental regulation takes place in a world in which firms search for least-cost adaptations to emission standards. Firms may substitute inputs, change the desired level of output, or defy the standard, if they perceive enforcement to be lax. This article estimates the impact of pollution-control standards for fly-ash and thermal-waste heat within a joint model of production. The model recognizes that effective control requires both the enactment and the enforcement of the legal standard. Empirical results, substantially different from those of previous studies, show that the level of enforcement is an important determinant of fly-ash-control costs and that fly-ash-control costs are many times greater than previously estimated.

Date: 1987
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