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A Standard‐Setting Agency and Environmental Enforcement
Author(s) -
Neilson William S.,
Kim Geum Soo
Publication year - 2001
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.1002/j.2325-8012.2001.tb00369.x
Subject(s) - agency (philosophy) , enforcement , environmental standard , perspective (graphical) , public economics , contrast (vision) , environmental policy , business , environmental economics , microeconomics , economics , political science , computer science , law , sociology , social science , artificial intelligence
This paper considers an environmental regulatory agency that sets both the emissions standard and the enforcement parameters in contrast to the usual treatment in which the agency sets only one of the two. It is shown that if the agency's budget is sufficiently small, it sets the strictest possible standard and adopts a policy that minimizes noncompliance with that standard, thus legitimizing the literature that assumes this behavior on the part of the agency. In contrast, if the budget is sufficiently large, the agency can obtain its unconstrained optimum, but this optimum has too little pollution from a social perspective.