Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/76511 
Year of Publication: 
2004
Series/Report no.: 
CESifo Working Paper No. 1193
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
In a market where firms with different characteristics decide upon both the level of emissions and their reports, we study the optimal audit policy for an enforcement agency whose objective is to minimize the level of emissions. We show that it is optimal to devote the resources primarily to the easiest-to-monitor firms and to those firms that value pollution the less. Moreover, unless the budget for monitoring is very large, there are always firms that do not comply with the environmental objective and others that do comply; but all of them evade the environmental taxes.
Subjects: 
environmental taxes
optimal audit policy
Document Type: 
Working Paper
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