Quota Enforcement in Resource Industries: Self-Reporting and Differentiated Inspections
Lars Hansen (),
Frank Jensen () and
No 2010/10, IFRO Working Paper from University of Copenhagen, Department of Food and Resource Economics
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)
New Economics Papers: this item is included in nep-env and nep-reg
Date: 2010-09, Revised 2011-05
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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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