Citation

Gren IM, Kaitala V. Int. Rev. Law Econ. 1997; 17(3): 395-407.

Copyright

(Copyright © 1997, Elsevier Publishing)

DOI

10.1016/S0144-8188(97)00016-1

PMID

unavailable

Abstract

Conditions under which an enforcement agency gains from disseminating information on its skill on detecting and convicting violators are analyzed. This seems to be a very attractive enforcement strategy because it can be accomplished at no or a very low cost. It is assumed that the enforcement agency signals when this implies net grains, which include losses from violation, such as negative environmental benefits and charge payments, and benefits from violation, i.e., expected fine payments of detected violations. The analytical results show that the impact on violation and associated net gains depends on (i) information strategies applied by the skillful and less skillful enforcement agency, respectively, and (ii) the relation between losses and expected fine payments for violations. When the information strategy implies a relatively high (low) probability for a skillful enforcement agency to reveal information, dissemination of information generates net gains when the losses from violation exceed (are below) the expected fine incomes. An application to regulation on farmers' manure treatment practices in Gotland shows that signaling may reduce or increase violation by about 25% depending on the signaling strategies. The calculated net benefits, the difference in environmental benefits, and expected fine payments, are, however, small in magnitude under all signaling strategies.