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Enforcement missions: targets vs budgets

Heyes, A. and Kapur, Sandeep (2009) Enforcement missions: targets vs budgets. Journal of Environmental Economics & Management 58 (2), pp. 129-140. ISSN 0095-0696.

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Enforcement of policy is typically delegated. What sort of mission should the head of an enforcement program be given? When there is more than one firm being regulated the firms’ decision problems—otherwise completely separate—become linked in a way that depends on that mission. Under some sorts of missions firms compete to avoid the attention of the enforcer by competitive reductions in the extent of their non-compliance, in others the interaction encourages competitive expansions. We develop a general model that allows for the ordering of some typical classes of missions. We find that in plausible settings ‘target-driven’ missions (that set a hard target in terms of environmental outcome but flexible budget) achieve the same outcome at lower cost than ‘budget-driven’ ones (that fix the enforcement budget). Inspection of some fixed fraction of firms is never optimal.

Item Type: Article
Keyword(s) / Subject(s): Enforcement, regulatory missions, policy delegation
School or Research Centre: Birkbeck Schools and Research Centres > School of Business, Economics & Informatics > Economics, Mathematics and Statistics
Depositing User: Administrator
Date Deposited: 24 Nov 2010 12:03
Last Modified: 17 Apr 2013 12:33

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