Environmental regulation: Choice of instruments under imperfect compliance

Inés Macho-Stadler

doi:https://doi.org/10.1007/s10108-007-9025-3

Environmental regulation: Choice of instruments under imperfect compliance

Inés Macho-Stadler

Department of Economics and Economic History

Research output: Contribution to journal › Article › Research › peer-review

12 Citations (Scopus)

Abstract

Compliance is an important issue in environmental regulation. 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 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, and we analyze the (static) efficiency of the solution. © 2007 Springer-Verlag.

Original language	English
Pages (from-to)	1-21
Journal	Spanish Economic Review
Volume	10
DOIs	https://doi.org/10.1007/s10108-007-9025-3
Publication status	Published - 1 Mar 2008

Keywords

Audits and compliance
Environmental instruments
Environmental regulation

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