Regulating Bureaucratic Polluters

Randolph M. Lyon
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Randolph M. Lyon: U.S. General Accounting Office and Georgetown University

Public Finance Review, 1990, vol. 18, issue 2, 198-220

Abstract: This article analyzes the behavior of polluting public-sector agencies and other bureaucracies under environmental polices based on economic incentives-such as transferable permits and pollution taxes—and underdirect regulations.A theoretical model is developed to consider the incentives for bureaucratic, as opposed to cost-minimizing , behavior that can arise where the provision of pollution control services increases the salary, prestige, and other perquisites of decision makers. The possible existence and magnitudes of the effects suggested by the model are then respectively examined by considering actual and simulated environmental management programs. The statistical evidence considered suggests that public-sector polluters may participate in a manner somewhat different from private-sector polluters under programs relying upon economic incentives. Because the available data are very limited, however, it is not possible to conclude that this difference, while consistent with bureaucratic incentives, is actually caused by them and not by other factors. The simulations suggest that even in the presence of bureaucratic distortions, programs relying upon economic incentives are likely to be less costly than direct regulations.

Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:18:y:1990:i:2:p:198-220

DOI: 10.1177/109114219001800204

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