Quota enforcement in resource industries: self-reporting and differentiated inspections
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Quota enforcement in resource industries : self-reporting and differentiated inspections. / Hansen, Lars Gårn; Jensen, Frank; Nøstbakken, Linda.
In: Environmental and Resource Economics, Vol. 58, No. 4, 2014, p. 539-562.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - Quota enforcement in resource industries
T2 - self-reporting and differentiated inspections
AU - Hansen, Lars Gårn
AU - Jensen, Frank
AU - Nøstbakken, Linda
N1 - Published online 4 August 2013
PY - 2014
Y1 - 2014
N2 - Quotas are frequently used in the management of renewable resources and emissions. However, in many industries there is concern about their basic effectiveness due to non-compliance. We develop an enforcement model of a quota-regulated resource and focus on a situation with significant non-compliance and exogenous constraints on fines and enforcement budget. We propose a new enforcement system based on self-reporting of excess extraction and explicit differentiation of inspection rates depending on compliance history. We use differentiated inspections to induce firms to self-report excess extraction. This system increases the effectiveness of the quota by allowing the regulator to implement a wider range of aggregate extraction targets than under traditional enforcement, while ensuring an efficient allocation of extraction. In addition, inspection costs can be reduced without reductions in welfare.
AB - Quotas are frequently used in the management of renewable resources and emissions. However, in many industries there is concern about their basic effectiveness due to non-compliance. We develop an enforcement model of a quota-regulated resource and focus on a situation with significant non-compliance and exogenous constraints on fines and enforcement budget. We propose a new enforcement system based on self-reporting of excess extraction and explicit differentiation of inspection rates depending on compliance history. We use differentiated inspections to induce firms to self-report excess extraction. This system increases the effectiveness of the quota by allowing the regulator to implement a wider range of aggregate extraction targets than under traditional enforcement, while ensuring an efficient allocation of extraction. In addition, inspection costs can be reduced without reductions in welfare.
U2 - 10.1007/s10640-013-9709-0
DO - 10.1007/s10640-013-9709-0
M3 - Journal article
VL - 58
SP - 539
EP - 562
JO - Environmental and Resource Economics
JF - Environmental and Resource Economics
SN - 0924-6460
IS - 4
ER -
ID: 99926873