Environmental Regulation: Choice of Instruments under Imperfect Compliance

Ines Macho-Stadler

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: Compliance is an important issue in environmental regulation. In this paper, we discuss some of the key elements of the problem and analyze a situation where emissions are not random and firms are risk-neutral. We study the firm's decision on emissions and compliance when the environmental regulation is based on standards and the enforcement agency audits the firm with a certain probability. We then compare total emissions when environmental regulation is based on different instruments: standards, taxes, and tradable permits. We show that when compliance is an issue, environmental taxes are superior to the other instruments. We also analyze the (static) efficiency of the solution.

Keywords: environmental regulation; audits and compliance; environmental standards; other instruments. (search for similar items in EconPapers)
JEL-codes: D82 K32 K42 (search for similar items in EconPapers)
Pages: 25
Date: 2006-11-20
New Economics Papers: this item is included in nep-env, nep-law and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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http://pareto.uab.es/wp/2006/67306.pdf (application/pdf)

Related works:
Working Paper: Environmental Regulation: Choice of Instruments under Imperfect Compliance (2015)
Journal Article: Environmental regulation: choice of instruments under imperfect compliance (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:673.06

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