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Ambient environmental inspections followed by sequential firm inspections

Author

Listed:
  • Laurent Franckx

    (K.U.Leuven, C.E.S., Energy, Transport and Environment
    Royal Military Academy)

Abstract
We consider an environmental enforcement agency who uses the measurement of ambient pollution to guide its inspections of individual polluters. We compare two different uses of this information. In a first model, the agency uses a ``threshold strategy": if ambient pollution exceeds an endogenous threshold, the agency inspects all individual polluters simultaneously. In a second model, the agency inspects polluters sequentially, and updates its beliefs after each firm inspection. If one ignores non-discrimination principles, and if the time span between two inspections is short enough, this sequential inspection policy is always superior to a simultaneous inspection policy.

Suggested Citation

  • Laurent Franckx, 2001. "Ambient environmental inspections followed by sequential firm inspections," Energy, Transport and Environment Working Papers Series ete0104, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    • Handle: RePEc:ete:etewps:ete0104
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    File URL: http://feb.kuleuven.be/drc/Economics/misc/ete_workingpapers/ete-wp01-06.pdf
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