Autor/es

Luengo, Carol ; Caffera, Marcelo ; Chávez, Carlos

Editor

Universidad de Montevideo, Facultad de Ciencias Empresariales y Economía, Departamento de Economía

Fecha

2019

Extensión

29 p.

Resumen

We present the results of a series of laboratory economic experiments designed to study compliance behavior of polluting firms when information on the penalty is uncertain. The experiments consist of a regulatory environment in which university students face emission standards and an enforcement mechanism composed of audit probabilities and penalties (conditional on detection of a violation). We examine how uncertainty on the penalty affects the compliance decision and the extent of violation under two enforcement levels: one in which the regulator induces perfect compliance and another one in which it does not. Our results suggest that in the first case, uncertain penalties increase the extent of the violations of those firms with higher marginal benefits. When enforcement is not sufficient to induce compliance, the uncertain penalties do not have any statistically significant effect on compliance behavior. Overall, the results suggest that a cost-effective design of emission standards should consider including public and complete information on the penalties for violations.

Palabras claves

Uncertainty Penalty Emission standard Economic experiment

Tipo de publicación

Documento de trabajo

Nivel de acceso

Abierto

Versión

Publicada

Colecciones

• Documentos de trabajo [66]