Abstract
More efficient enforcement of environmental regulations would enhance environmental conditions around the globe by improving compliance to existing regulations and by allowing regulatory agencies to broaden their scope without increasing their budgets. This research analyzes comply-evade decisions by regulated firms in the context of their relationships with environmental agencies, and determines which enforcement policies effectively encourage voluntary compliance. More specifically, the enforcement conflict is modeled as a 2/spl times/2 non-cooperative game called the Enforcement Dilemma. This game is examined as a simultaneous game, and also as a more realistic sequential game with asymmetric information. Then a supergame based on the Enforcement Dilemma is developed and analyzed. An effective long-term policy called the review strategy is proposed to overcome the dilemma in this context. >
Published Version
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