Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/204315
Authors: 
Hansen, Lars Gårn
Jensen, Frank
Nøstbakken, Linda
Year of Publication: 
2010
Series/Report no.: 
FOI Working Paper 2010/10
Abstract: 
Quotas or permits are frequently used in the management of renewable resources and emissions. However, in many industries there is concern about the basic e ectiveness of quotas due to non-compliance. We develop an enforcement model of a quota-regulated resource and focus on a situation with signi cant non-compliance and exogenous constraints on nes and enforcement budget. We propose a new enforcement system based on self-reporting of excess extraction and explicit di erentiation of inspection rates based on compliance history. In particular, we use state-dependent enforcement to induce rms to self-report excess extraction. We show that such system increases the e ectiveness of quota management by allowing the regulator to implement a wider range of aggregate extraction targets than under traditional enforcement, while ensuring an efficient allocation of aggregate extraction. In addition, inspection costs can be reduced without reductions in welfare.
Subjects: 
Enforcement
Non-compliance
Self-reporting
Di erentiated inspections
Quotas
Emissions standards
Resource Management
JEL: 
D61
H0
Q20
Q22
Q28
Document Type: 
Working Paper

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