Ambient environmental monitoring, sequential firm inspections and time-decreasing benefits of inspection

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 threshold, the agency inspects all individual polluters simultaneously. In a second model, the agency inspects polluters sequentially, and s its beliefs with respect to the firms' behavior after each firm inspection. If the cost of delaying the inspection of noncompliant firms is low enough, this sequential inspection policy is superior to a simultaneous inspection policy. However, if the cost of delay is high, the agency is better off if it commits itself to ignoring some information embedded in ambient pollution.environmental enforcement ambient monitoring sequential inspection policy

Environmental policy as a multi-task principal-agent problem

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 participation constraint. In the second, the EPA provides the harshest possible punishment for a "poor" observed environmental performance and the highest possible reward for a "good" observed environmental performance. Increases in the available budget and in the maximally allowed penalty have then an ambiguous e_ect on total environmental quality.environmental regulation, multi-tasking

``The choice between emission taxes and output taxes under imperfect monitoring": a comment

We consider a special case of Schmutzler's and Goulder''s (1997) analysis of output taxes vs emission taxes as environmental policy instruments. We identify new necessary conditions for the existence of an optimum. We also show that, in this case, it is always optimal to have a mixed tax with positive enforcement effort.

A theoretical framework for incentives in the public sector

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 with stochastic wage bills. In our incentive scheme., the organization contains three jobs. Every period, the organization recruits two agents for the ``field" jobs. At the end of the period, one agent is put in retirement and the other is promoted to the ``executive" job. An agent will be promoted if he has obtained the highest performance on the managerial aspects of the ``field" job, and has passed an endogenous standard of performance on the technical aspects of this ``field" job. This system (1) provides incentives for optimal efforts in the ``field" job AND (2) improves on a purely random allocation system of the “executiveâ€. There are problems of time consistency, though.

Environmental Liability and Organizational Structure

This paper presents a multitask principal-agent model to examine how environmental liability rules for individual managers within a corporate hierarchy affect, on the one hand, the incentive schemes the organization provides and, on the other hand, the choice between a functional or a product-based organizational structure. If managers are risk neutral, a product-based organization dominates a functional organization and allows to obtain first-best effort level. If, moreover, there are no diseconomies of span, both organizational forms are equivalent. It is also shown that for the dominant function, effort levels are higher in a product-based organization than in a functional one. With risk averse managers, no organizational structure dominates the other in general, but we are able to identify under which conditions it does not matter who is held liable for environmental damages.contracts, liability, firm structure, principal-agent

De Belgische staatshervorming en het Zeerecht

Belgium became officialy a federal state in 1993. The federal competence was reshuffeled and parts of it attributed to the Communities and Regions. Since the latter became competent in economic matters, it is mostly the redistribution of powers between the federal and regional level which is at order in this study. At first sight, a rather simple rule of thumb can be applied. All waters located on the land-side of the baseline, i.e. the low-water line in Belgium, belong to the competence of the Regions. All waters on the seaside of the baseline, on the other hand, remain a federal competence. This is the result of a basic interpretation given by the Conseil d’Etat in 1976. This body reached the conclusion that the territorial sea did not form part of the Belgian territory. Since the geographical situation is such that only one province borders the sea in Belgium, this interpretation was welcomed by the government at a time when the first steps of the federalization were being worked out. The territorial sea thus remained a federal competence, and the other maritime areas on the sea-side of the baseline followed this example. The application of this criterion of the baseline, it should be noted, sometimes leads to tensions between the federal and the regional authorities, as evidenced by the control of the quality of swimming water. But exceptions to this basic rule exist. First of all, a certain competence on the sea-side of the baseline has been attributed to the Flemish Region, such as the competence regarding pilotage, buoyage and towing at sea. Also the financial support of the fishing industry was regionalized. Secondly, the government has indicated its willingness to transfer certain other parts of its competence with respect to the exploration and exploitation of the natural resources of the territorial sea and the continental shelf. Even though this commitment was made in 1980, as of today no implementation has followed. Thirdly, new tendencies can be discerned. Recent opinions delivered by the Conseil d’ Etat, for instance, seem to establish a link between the international and external competence of the Communities and Regions. A kind, of Task Force has moreover been established within the Flemish Region with respect to the delimitation of the maritime areas with the Netherlands at the request. Of the federal Ministry of Foreign Affairs. Since the Regions have strictly speaking no competence in this area whatsoever, this development certainly contradicts the mere application of the above-mentioned rule of thumb. Fourthly, even in areas, which were transferred to the Regions, general police and shipping regulations remain a federal competence. Therefore, one can hardly consider this transfer of competence, which took place with respect to law of the sea matters in Belgium to be straightforward and well conceived according to a predetermined plan. Sometimes only accessories have been transferred, but not the essentials (ex. financial support of fisheries, but not fisheries at sea itself), at other occasions, some competence has been handed over, which should not have been touched upon ex. the custom and coastguard vessels, even though customs and police at sea remain a federal competence