New Economics Papers
on Law and Economics
Issue of 2012‒09‒30
two papers chosen by
Jeong-Joon Lee, Towson University

  1. When do Firms Break the Law in Order to Reduce Marginal Cost? - An Application to the Problem of Environmental Inspection By Häckner, Jonas; Herzing, Mathias
  2. Green Transformation of Small Businesses: Achieving and Going Beyond Environmental Requirements By Eugene Mazur

  1. By: Häckner, Jonas (Dept. of Economics, Stockholm University); Herzing, Mathias (Dept. of Economics, Stockholm University)
    Abstract: This study attempts to identify firm characteristics that are important in determining whether or not a specific firm has strong incentives for non-compliance with environmental laws. In particular, we analyze how these incentives are related to the size of the cost reductions associated with non-compliance, business cycle conditions, the degree of product differentiation, market structure, and price versus quantity competition. When cost reductions are non-dramatic, in the sense that they do not lead to monopoly, the following rules of thumb are suggested. 1) Inspection should be intensified during booms, 2) firms that face high costs of compliance should be inspected more intensely and 3)firms that are insulated from competition by product differentiation or by lack of competitors should be inspected more intensely. Although our prime focus is environmental inspection, the theoretical findings readily extends to other similar applications such as VAT fraud and violations against import restrictions. They can also have some bearing on the monitoring of financial markets that are subject to regulation.
    Keywords: Environmental Inspection; Market Structure; Product Differentiation; Bertrand; Cournot
    JEL: K32 L13 Q58
    Date: 2012–09–20
  2. By: Eugene Mazur
    Abstract: This report aims to help environmental and other competent authorities in OECD countries to promote green business practices among small and medium-sized enterprises (SMEs). It analyses different ways to establish environmental regulatory requirements for facilities with low environmental risk (most of which are SMEs). It also examines how to design and apply information and market-based tools to promote compliance with such requirements and adoption of cleaner technologies and good environmental management practices. The report suggests several ways to increase the effectiveness of these promotion tools with respect to the SME community.<P> The report addresses the roles of environmental authorities, local governments, business organisations and financial institutions in the greening of small businesses. It reviews in detail the experience of France, Ireland, Korea, the Netherlands and the UK (England and Wales and Scotland) and draws on examples of several other countries.
    Keywords: SMEs, green growth, environmental authorities, environmental compliance
    JEL: K32 K42 L53 M48 O44 O57 Q58
    Date: 2012–09–20

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