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The Objective of an Environmental Regulatory Agency
Kim, Geum Soo,Neilson, William S . 한국경제학회 2001 The Korean Economic Review Vol.17 No.2
The objective of an environmental regulatory agency in charge of enforcing an environmental standard is studied. It is assumed that the standard and the agency's budget are set by an overseeing authority. It is found that depending on the standard and the budget given to the agency, the agency may or may not behave as if it minimizes noncompliance, even though its true objective is to maximize total profit minus damages. It is also shown that when the higher level agency sets the standard and enforcement budget to maximize social welfare, the agency acts as if it minimizes noncompliance.