Optimal Environmental Standards under Asymmetric Information and Imperfect Enforcement

C. Arguedas

Optimal Environmental Standards under Asymmetric Information and Imperfect Enforcement

C. Arguedas

Economics

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Abstract

We study optimal policies composed of pollution standards, probabilities of inspection and fines dependant on the degree of noncompliance with the standards, in a context where regulated firms own private information.In contrast with previous literature, we show that optimal policies, being either pooling or separating, can imply violations to strictly positive standards.This results crucially depends on the monitoring costs, the types of firms and the regulator's degree of uncertainty.

Original language	English
Place of Publication	Tilburg
Publisher	Microeconomics
Number of pages	38
Volume	2005-10
Publication status	Published - 2005

Publication series

Name	CentER Discussion Paper
Volume	2005-10

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 3 Good Health and Well-being

Keywords

standard-setting
costly inspections
convex fines
asymmetric information
noncompliance

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abstract = "We study optimal policies composed of pollution standards, probabilities of inspection and fines dependant on the degree of noncompliance with the standards, in a context where regulated firms own private information.In contrast with previous literature, we show that optimal policies, being either pooling or separating, can imply violations to strictly positive standards.This results crucially depends on the monitoring costs, the types of firms and the regulator's degree of uncertainty.",

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AB - We study optimal policies composed of pollution standards, probabilities of inspection and fines dependant on the degree of noncompliance with the standards, in a context where regulated firms own private information.In contrast with previous literature, we show that optimal policies, being either pooling or separating, can imply violations to strictly positive standards.This results crucially depends on the monitoring costs, the types of firms and the regulator's degree of uncertainty.

KW - standard-setting

KW - costly inspections

KW - convex fines

KW - asymmetric information

KW - noncompliance

M3 - Discussion paper

VL - 2005-10

T3 - CentER Discussion Paper

BT - Optimal Environmental Standards under Asymmetric Information and Imperfect Enforcement

PB - Microeconomics

CY - Tilburg

ER -

Optimal Environmental Standards under Asymmetric Information and Imperfect Enforcement

Abstract

Publication series

UN SDGs

Keywords

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