Abstract
Quotas are frequently used in the management of renewable resources and emissions. However, in many industries there is concern about their basic effectiveness due to non-compliance. We develop an enforcement model of a quota-regulated resource and focus on a situation with significant non-compliance and exogenous constraints on fines and enforcement budget. We propose a new enforcement system based on self-reporting of excess extraction and explicit differentiation of inspection rates depending on compliance history. We use differentiated inspections to induce firms to self-report excess extraction. This system increases the effectiveness of the quota by allowing the regulator to implement a wider range of aggregate extraction targets than under traditional enforcement, while ensuring an efficient allocation of extraction. In addition, inspection costs can be reduced without reductions in welfare.
| Translated title of the contribution | Kvotehåndhævelse i ressource-industrier: selvangivelse og differentieret inspektion |
|---|---|
| Original language | English |
| Journal | Environmental and Resource Economics |
| Volume | 58 |
| Issue number | 4 |
| Pages (from-to) | 539-562 |
| Number of pages | 24 |
| ISSN | 0924-6460 |
| DOIs | |
| Publication status | Published - Jul 2014 |
