Multiple receptor ambient monitoring and firm compliance with environmental taxes under budget and target driven regulatory missions

Gregory Colson, Luisa Menapace

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

Abstract

We analyze the potential for an environmental monitoring agency under different regulatory missions to use multiple measures of ambient pollution levels to induce firm compliance via endogenously determined probabilistic firm-level inspections of polluting activities. Departing from previous analyses, we consider a framework where the regulator has multiple, rather than a single, measures of ambient pollution in a setting where many firms are subject to a self-reported emissions tax that is not perfectly enforceable. Under a budget-driven mission, we show that a regulator can fruitfully utilize the added information from multiple ambient monitoring receptors to induce improved environmental compliance through the creation of strategic interactions among firms. Additionally, our results provide new evidence on the relative efficiency of budget- vs. target-driven environmental enforcement missions.

Original languageEnglish
Pages (from-to)390-401
Number of pages12
JournalJournal of Environmental Economics and Management
Volume64
Issue number3
DOIs
StatePublished - Nov 2012
Externally publishedYes

Keywords

  • Ambient monitoring
  • Auditing policy
  • Environmental enforcement
  • Environmental tax
  • Regulatory mission

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