INFORMAL REGULATION OF INDUSTRIAL-POLLUTION IN DEVELOPING-COUNTRIES -EVIDENCE FROM INDONESIA

When formal regulation is weak or absent, communities often use other channels to induce pollution abatement by local factories in a process of ''informal regulation.'' The resulting ''pollution equilibrium'' r eflects the relative bargaining power of the community and the plant. This note uses Indonesian data from 1989-90 on plant-level organic wat er pollution to test the informal regulation hypothesis.