MONITORING OF POLLUTION REGULATION - DO LOCAL CONDITIONS MATTER

Economists have greatly criticized regulations that impose uniform env ironmental standards. Such a critic ignores that the implementation of the standards may vary significantly across plants, thus giving rise in fact to non-uniform standards. The purpose of this paper is to anal yze the determinants of the regulator's monitoring activities. We show that greater inspection effort, ceteris paribus, is allocated towards those plants whose emissions are likely to generate a higher level of damages. On the other hand, we show that the behavior of the regulato r is also a function of variables that may not be directly related to abatement cost and damages. In particular, we show that variables pert aining to local labor market conditions have an impact on the monitori ng strategy adopted by the regulator.