Discretionary enforcement and strategic interactions between enforcement agencies and firms: a theoretical and laboratory investigation

Main author: Germani, Anna Rita
Other authors: Scaramozzino, Pasquale
Morone, Andrea
Morone, Piergiuseppe
Format: Journal Article           
Online access: Click here to view record


id eprints-24624
recordtype eprints
institution SOAS, University of London
collection SOAS Research Online
language English
language_search English
description This paper presents a game theoretic morphological analysis of the strategic interactions between environmental enforcement authorities and polluting firms. The models explore the role of discretion that such authorities enjoy, either in deciding how to pursue environmental violations (investigative and prosecutorial discretion) or in judging them (judicial discretion). The purpose is to identify both the optimal firms’ behaviour in terms of compliance, and the enforcement authorities’ optimal strategies in terms of enforcement actions to undertake. Consistent with the setting of the game theoretic models, the role of the enforcement agencies in deterring firms from polluting is, then, empirically tested by means of laboratory experiments. Laboratory evidence on compliance behaviour of firms when faced with enforcement conditions predicted by the theoretical models set up is discussed for the different experimental treatments performed. Overall, we suggest that making environmental enforcement less predictable for the firms, and thus creating a degree of uncertainty for the violators, can actually encourage deterrence and, thus, improve compliance. Thus, a partly unpredictable enforcement strategy may generate more compliance than an environmental policy that is known with certainty in advance.
format Journal Article
author Germani, Anna Rita
author_facet Germani, Anna Rita
Scaramozzino, Pasquale
Morone, Andrea
Morone, Piergiuseppe
authorStr Germani, Anna Rita
author_letter Germani, Anna Rita
author2 Scaramozzino, Pasquale
Morone, Andrea
Morone, Piergiuseppe
author2Str Scaramozzino, Pasquale
Morone, Andrea
Morone, Piergiuseppe
title Discretionary enforcement and strategic interactions between enforcement agencies and firms: a theoretical and laboratory investigation
publisher Springer Nature
publishDate 2017
url https://eprints.soas.ac.uk/24624/