Public Technological Aid to Support Compliance to Environmental Standards

Public aid to encourage the adoption of superior emissions-control technologies is combined with monitoring to achieve a predetermined level of compliance to firm-specific abatement standards. Technological aid serves as an indirect enforcement tool in the sense that its provision reduces the direct enforcement effort necessary to reach the compliance goal. Furthermore, when direct enforcement effort and technological aid are combined to minimize the costs of reaching the compliance goal, more aid should be provided when direct enforcement effort is expensive. As a consequence, regulated firms adopt better control technologies, which, in turn, may serve to promote further innovative activity.