The geographic distribution of environmental inspections |
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Authors: | Heather Eckert and Andrew Eckert |
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Institution: | (1) Center for Economic Studies, K. U. Leuven, Naamsestraat 69, Leuven, 3000, Belgium |
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Abstract: | Models of the enforcement of environmental regulations regarding point source pollution suppose that the probability of inspection
or audit is independent across facilities. However, there are a number of reasons why regulators may choose to inspect many
sites in a particular geographic area at one time. If the probability a site is inspected also depends on its compliance behavior,
the expected payoff from choosing to violate will depend upon the compliance decisions of neighboring sites, creating a game
of strategic interdependence between firms. In this paper, we use a dataset of inspections at petroleum storage sites in Manitoba
between 1981 and 1998 to consider to what extent inspections are spatially correlated and whether inspection probabilities
are a function of the inspection and violation history of the site and its neighbors. Further, we examine to what extent firms
take into account whether their neighbors have been previously found in violation in determining compliance. |
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