Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/235022 
Year of Publication: 
2021
Series/Report no.: 
AWI Discussion Paper Series No. 699
Publisher: 
University of Heidelberg, Department of Economics, Heidelberg
Abstract: 
In a simplifying analytical framework with endogenous levels of actual and self-reported emissions, we consolidate the existing literature into three main hypotheses about the relative merits, for a resource-constrained regulator, of random (RAM) and competitive (CAM) audit mechanisms in the presence or absence of peer information about actual emissions. Testing the three hypotheses in a quasi-laboratory experiment (N = 131), we find supportive evidence that CAM always induce more truthful reporting than RAM. Moreover, we provide the empirical validation of the theoretical prediction that CAM can succeed in aligning actual emissions more closely with the social optimum in the presence of peer information when RAM cannot. Behavioral mechanisms prevent reaching the first-best outcome.
Subjects: 
environmental regulation
regulatory compliance
tournament theory
mechanism design
Laboratory experiment
JEL: 
D62
H41
H83
L51
Q58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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