The Economics of Monitoring and Enforcement: Analyses of Trilateral Settings

The thesis acknowledges that in many law enforcement situations more than two types of actors are involved. It analyzes three different scenarios each adding a distinct third type of actor to the standard economic model of regulatory monitoring and enforcement.The first part considers citizens reporting crime and analyzes the impacts of citizens motivated to share their knowledge with enforcement authorities on the stage of rule design. The main contribution is that it uncovers a previously overlooked benefit of uniform regulations. It is shown that such regulations can be efficiency enhancing as they harness citizen reporting thereby reducing costly regulatory inspections.The second part considers private initiatives monitoring environmental mediums in order to detect potential pollution events. It analyzes how improvements in citizens' capability to assess whether a firm polluted affects pollution, environmental harm, and overall welfare. It is shown that a decrease in the probability of falsely not detecting an actual pollution event has ambiguous effects. Especially, due to crowding effects, a better monitoring technology can lead to more pollution, less environmental quality, and lower overall welfare.The third part considers the recent trend of an increased criminalization of environmental offences. It explicitly considers the institutional framework in which criminal law enforcement authorities, i.e. prosecutors and courts, are operating. This part shows that the restrictions accompanied with this framework - the legality principle and constrained sanctioning discretion - can have negative effects on polluters' incentives to self-report pollution events. This in turn decreases the regulator's ability to order recovery. Thus, it is shown that the merits of the higher deterrence of criminal law can be offset by less self-reporting and less recovery.