Comparing Environmental Policy Instruments in the Presence of Imperfect Compliance – A Case Study |
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Authors: | Email author" target="_blank">Sandra?RousseauEmail author Stef?Proost |
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Institution: | (1) K.U.Leuven, Centre for Economic Studies, Naamsestraat 69, 3000 Leuven, Belgium |
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Abstract: | In this paper, we aim to include rule making, implementation, monitoring and enforcement costs into the cost comparison of
policy instruments. We use a simple partial equilibrium model and apply it to the textile industry. The model includes discrete
abatement functions and costly monitoring and enforcement. The case study uses individual firm data to simulate the differences
in abatement costs and compliance decisions between firms. We compare combinations of regulatory instruments (emission taxes,
emission standards and technology standards) and enforcement instruments (criminal fines, civil fines and transaction offers).
We show that the inclusion of information, monitoring and enforcement costs indeed alters the relative cost efficiency of
the different instruments. |
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Keywords: | efficiency environmental management government policy illegal behaviour and the enforcement of law transaction costs |
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