Optimal fines for environmental noncompliance under a decentralized enforcement policy
نویسندگان
چکیده
We consider the determination of the optimal ne for noncompliance by a legislator who anticipates the inspection game between an autonomous inspection agency and polluting rms. This agency can make the inspection of individual rms contingent on ambient pollution. The agency's autonomy implies that it cannot commit itself to announced inspection probabilities. If the legislator centralizes the decision to monitor ambient pollution, the optimal ne is in nitely large. The legislator can then forbid ambient inspections to avoid overenforcement. If the legislator decentralizes the decision to monitor ambient pollution, overenforcement can be avoided by choosing a nite ne.
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