Weak Enforcement of Environmental Policies: A Tale of Limited Commitment and Limited Fines - Paris-Jourdan Sciences Économiques Access content directly
Journal Articles Annals of Economics and Statistics Year : 2011

Weak Enforcement of Environmental Policies: A Tale of Limited Commitment and Limited Fines

Abstract

When a Ørm undertakes activities which are risky for the environment, the conflict between social and private incentives to exercise safety care requires imposing fines in case a damage occurs. Introducing asymmetric information on the firm's wealth, we show that the Ønes and probabilities of investigation are systematically too low compared to their optimal level under complete information. This eÆect is exacerbated when the public agency in charge can no longer commit to an investigation strategy. Compounding asymmetric information with a government failure provides a possible explanation of the significant trend in practice towards a weak enforcement of environmental policies.
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Dates and versions

halshs-00754494 , version 1 (20-11-2012)

Identifiers

  • HAL Id : halshs-00754494 , version 1
  • PRODINRA : 316665

Cite

Yolande Hiriart, David Martimort, Jérôme Pouyet. Weak Enforcement of Environmental Policies: A Tale of Limited Commitment and Limited Fines. Annals of Economics and Statistics, 2011, 103-102, pp.25-42. ⟨halshs-00754494⟩
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