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A note on relative violation arguments in expected penalty functions for permit non-compliance

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  • Aaron Hatcher
Models of firm noncompliance under imperfectly enforced standards and permit regimes normally include a level violation argument in the firm's expected penalty function, analogous to the constraint term in a Lagrangian function. This article suggests that a relative violation argument may be more appropriate in many cases and demonstrates how this can change our predictions about firm behaviour under permit regimes.
Original languageEnglish
Pages (from-to)421-423
Number of pages3
JournalApplied Economics Letters
Volume16
Issue number4
DOIs
Publication statusPublished - 2009

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