This paper presents a game theoretic morphological analysis of the strategic interactions between environmental enforcement authorities and polluting firms. The models explore the role of discretion that such authorities enjoy, either in deciding how to pursue environmental violations (investigative and prosecutorial discretion) or in judging them (judicial discretion). The purpose is to identify both the optimal firms’ behaviour in terms of compliance, and the enforcement authorities’ optimal strategies in terms of enforcement actions to undertake. Consistent with the setting of the game theoretic models, the role of the enforcement agencies in deterring firms from polluting is, then, empirically tested by means of laboratory experiments. Laboratory evidence on compliance behaviour of firms when faced with enforcement conditions predicted by the theoretical models set up is discussed for the different experimental treatments performed. Overall, we suggest that making environmental enforcement less predictable for the firms, and thus creating a degree of uncertainty for the violators, can actually encourage deterrence and, thus, improve compliance. Thus, a partly unpredictable enforcement strategy may generate more compliance than an environmental policy that is known with certainty in advance.

Germani, A.r., Scaramozzino, P., Morone, A., Morone, P. (2017). Discretionary enforcement and strategic interactions between enforcement agencies and firms: a theoretical and laboratory investigation. JOURNAL OF REGULATORY ECONOMICS, 52(3), 255-284 [10.1007/s11149-017-9341-y].

Discretionary enforcement and strategic interactions between enforcement agencies and firms: a theoretical and laboratory investigation

Scaramozzino, Pasquale;
2017-12-01

Abstract

This paper presents a game theoretic morphological analysis of the strategic interactions between environmental enforcement authorities and polluting firms. The models explore the role of discretion that such authorities enjoy, either in deciding how to pursue environmental violations (investigative and prosecutorial discretion) or in judging them (judicial discretion). The purpose is to identify both the optimal firms’ behaviour in terms of compliance, and the enforcement authorities’ optimal strategies in terms of enforcement actions to undertake. Consistent with the setting of the game theoretic models, the role of the enforcement agencies in deterring firms from polluting is, then, empirically tested by means of laboratory experiments. Laboratory evidence on compliance behaviour of firms when faced with enforcement conditions predicted by the theoretical models set up is discussed for the different experimental treatments performed. Overall, we suggest that making environmental enforcement less predictable for the firms, and thus creating a degree of uncertainty for the violators, can actually encourage deterrence and, thus, improve compliance. Thus, a partly unpredictable enforcement strategy may generate more compliance than an environmental policy that is known with certainty in advance.
dic-2017
Pubblicato
Rilevanza internazionale
Articolo
Esperti anonimi
Settore SECS-P/01 - ECONOMIA POLITICA
English
Con Impact Factor ISI
environmental enforcement, discretion, game theory, experimental economics
https://link.springer.com/article/10.1007/s11149-017-9341-y
Germani, A.r., Scaramozzino, P., Morone, A., Morone, P. (2017). Discretionary enforcement and strategic interactions between enforcement agencies and firms: a theoretical and laboratory investigation. JOURNAL OF REGULATORY ECONOMICS, 52(3), 255-284 [10.1007/s11149-017-9341-y].
Germani, Ar; Scaramozzino, P; Morone, A; Morone, P
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2108/214496
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