UAM. Departamento de Análisis Económico, Teoría Económica e Historia Económica
Abstract
Effluent limits are frequently based on a uniform emission standard, which applies to all
polluting facilities within in a single industry. However, the implementation of many environmental
protection laws does not lead to uniform effluent limits due to considerations of local environmental
conditions. In this paper, we theoretically examine the relationships among the stringency of effluent
limits imposed on individual polluting facilities, environmental protection agencies’ monitoring
decisions, and the ambient quality of the local environment. We then extend the theoretical analysis by
exploring the establishment of effluent limits when (1) the national emission standard represents only
an upper bound on the local issuance of limits and (2) negotiation efforts expended by both regulated
polluting facilities and environmentally concerned citizens play a role. We find that the negotiated
discharge limit depends on the political weight enjoyed and the negotiation effort costs faced by both
citizens and the regulated facility, along with the stringency of the national standard and local ambient
quality condition