We use a multi-task principal-agent model with moral hazard to study environmental regulation of a private agent by an EPA that can also allocate its budget to an alternative project with environmental benefits. In a first possible optimum, the EPA imposes a flat fine that exhausts the agent's...

This paper verifies the robustness of Dixit's claim that common agency problems in the public sector can be solved by restrictions on the incentive schemes that government agencies can develop for the subordinates of other departments. In our model, the outside principal (for instance, an...

We consider environmental regulation of n risk-averse, multiple pollutant firms. We develop a “yardstick competition” scheme where the regulatory scheme depends on the dierence between a firm’s “aggregate” performance and the average “aggregate” performance of the industry. Whether...

This paper extends a previous analysis by Franckx (2001). We consider an inspection game between n polluting firms and an environmental enforcement agency. If the cost of monitoring ambient pollution is low enough, the optimal inspection policy consists in, on the one hand, imposing the maximal...

We consider the determination of the optimal fine for noncompliance by a legislator who anticipates the inspection game between an autonomous inspection agency and polluting firms. This agency can make the inspection of individual firms contingent on ambient pollution. The agency's autonomy...

We consider an environmental enforcement agency who uses the measurement of ambient pollution to guide its inspections of individual polluters. We compare two different uses of this information. In a first model, the agency uses a ``threshold strategy": if ambient pollution exceeds an endogenous...

We consider an inspection game between an arbitrary number of polluting firms and an agency who can choose to monitor ambient pollution. We obtain an equilibrium where all firms comply with the same probability and where the inspection agency inspects all firms individually if ambient pollution...

This note considers the provision of incentives in public organizations that face the following three constraints. First, no lateral entry is possible. Second, the outside opportunities of bureaucrats are independent of their performance. Third, the organization cannot design incentive schemes...

This paper clarifies an issue in the Hirshleifer and Rasmusen-Tsebelis controversy on the effects of penalties on crime: what is the effect of penalties if the transgression of law has a discrete nature and if the law enforcer cannot act as Stackelberg leader? We differentiate between technical...

This paper reviews the available evidence on the relevance of the Porter hypothesis for automotive emission standards. It focuses on two channels through which the Porter effect may operate. First, there is evidence that emission standards for cars have had important effects on innovation at...