Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/314130 
Year of Publication: 
2021
Citation: 
[Journal:] Journal of Applied Economics [ISSN:] 1667-6726 [Volume:] 24 [Issue:] 1 [Year:] 2021 [Pages:] 45-70
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
Using experiments in which participants play the role of polluting firms, we study compliance behavior with emissions limits under two types of fines and two different regulatory instruments. We find that the market price of pollution permits and the probability of violating permits holdings are higher with a fine that is convex in the level of violation than with one that is linear. This effect operates through an increase in the prices asked by sellers, not in the bids made by the buyers of permits. We do not observe an effect of the type of the fine on the average level of violation or the number of firms in violation in the case of emission standards. We conclude that the type of fines may affect the cost-effectiveness of pollution control programs based on tradable pollution permits.
Subjects: 
enforcement
Environmental policy
laboratory experiments
penalty structure
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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