Ovaere, Proost & Rousseau, 2013

Lotte Ovaere, Stef Proost & Sandra Rousseau. The choice of environmental regulatory enforcement by lobby groups, Journal of Environmental Economics and Policy 2013, vol. 2(3), 328-347

Across countries and regions, wide variations exist in the enforcement strategies that are used to reach compliance with monitoring regulations. In this paper, the authors study whether the differences in enforcement policies can be justified from an efficiency perspective, and if not, whether they favor the interest of certain lobby groups. They develop a theoretical model to derive the preferred enforcement policy, which is characterized from a global efficiency point of view, and also from the point of view of different interest groups. Also, they explicitly allow for a non-linear deterrence effect of fines. They find that, despite the regulatory costs, green interest groups generally favor more stringent enforcement strategies with high fines and high inspection frequencies, while brown interest groups prefer laxer enforcement strategies. However, they do not find conclusive empirical evidence to support this theoretical result for the European Union.

Full publication here.