Quota Enforcement in Resource Industries: Self-Reporting and Differentiated Inspections

Lars Hansen, Frank Jensen () and Linda Nøstbakken

No 2010/10, IFRO Working Paper from University of Copenhagen, Department of Food and Resource Economics

Abstract: Quotas or permits are frequently used in the management of renewable resources and emissions. However, in many industries there is concern about the basic e ectiveness of quotas due to non-compliance. We develop an enforcement model of a quota-regulated resource and focus on a situation with signi cant non-compliance and exogenous constraints on nes and enforcement budget. We propose a new enforcement system based on self-reporting of excess extraction and explicit di erentiation of inspection rates based on compliance history. In particular, we use state-dependent enforcement to induce rms to self-report excess extraction. We show that such system increases the e ectiveness of quota management by allowing the regulator to implement a wider range of aggregate extraction targets than under traditional enforcement, while ensuring an ecient allocation of aggregate extraction. In addition, inspection costs can be reduced without reductions in welfare.

Keywords: Enforcement; Non-compliance; Self-reporting; Di erentiated inspections; Quotas; Emissions standards; Resource Management (search for similar items in EconPapers)
JEL-codes: D61 H0 Q20 Q22 Q28 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2010-09, Revised 2011-05
New Economics Papers: this item is included in nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Quota Enforcement in Resource Industries: Self-Reporting and Differentiated Inspections (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:foi:wpaper:2010_10

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