Self-reporting of pollution and the firm's behavior under imperfectly enforceable regulations |
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| Institution: | 1. Institute of Automatic Control and Robotics, Warsaw University of Technology, św. A. Boboli 8, 02-525 Warsaw, Poland;1. School of Chemical Engineering, National Technical University of Athens, Iroon Polytechneiou 9, Zografou 157 80, Athens, Greece;2. ‘Athena’ Research and Innovation Center, Artemidos 6 & Epidavrou, Maroussi 151 25, Athens, Greece;1. Institute of Geographical Science and Natural Resources Research, Beijing, China;4. University of Chinese Academy of Sciences, Beijing, China |
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| Abstract: | Motivated by the nature of U.S. laws, a model is developed for a firm that maximizes expected profit and faces imperfectly enforceable pollution standards with imperfectly enforceable reporting requirements. Some previous models of imperfectly enforceable standards and taxes are special cases of this general mode. When the fine for violating the pollution standard is linear in excess pollution, the form will equate the marginal cost of control to the marginal fine rate, and thus actual pollution will be insensitive to enforcement parameters related to under-reporting. The more complex comparative statics that exist when the fine is non-linear are analyzed, and comparisons with other models are made. |
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