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A Laboratory Investigation Of Compliance Behavior Under Tradable Emissions Rights: Implications For Targeted Enforcement, James J. Murphy, John Stranlund
A Laboratory Investigation Of Compliance Behavior Under Tradable Emissions Rights: Implications For Targeted Enforcement, James J. Murphy, John Stranlund
PERI Working Papers
This paper uses laboratory experiments to test the theoretical observations that both the violations of competitive risk-neutral firms and the marginal effectiveness of increased enforcement across firms are independent of differences in their abatement costs and their initial allocations of permits. This conclusion has important implications for enforcing emissions trading programs because it suggests that regulators have no justification for targeting their enforcement effort based on firm-level characteristics. Consistent with the theory, we find that subjects’ violations were independent of parametric differences in their abatement costs. However, those subjects that were predicted to buy permits tended to have higher violation …
An Investigation Of Voluntary Discovery And Disclosure Of Environmental Violations Using Laboratory Experiments, James J. Murphy, John K. Stranlund
An Investigation Of Voluntary Discovery And Disclosure Of Environmental Violations Using Laboratory Experiments, James J. Murphy, John K. Stranlund
PERI Working Papers
This paper uses laboratory experiments to test individual responses to policies that seek to encourage firms to voluntarily discover and disclose violations of environmental standards. We find that while it is possible to motivate a significant number of voluntary disclosures without adversely affecting environmental quality, this result is sensitive to both the fine for disclosed violations and the assumption that firms know their compliance status without cost. When firms have to expend resources to determine their compliance status, motivating a significant number of violation disclosures yields worse environmental quality. Finally, relative to conventional enforcement, disclosure polices will result in more …