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Regulating Bureaucratic Polluters

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  • Randolph M. Lyon

    (U.S. General Accounting Office and Georgetown University)

Abstract

This article analyzes the behavior of polluting public-sector agencies and other bureaucracies under environmental polices based on economic incentives-such as transferable permits and pollution taxes—and underdirect regulations.A theoretical model is developed to consider the incentives for bureaucratic, as opposed to cost-minimizing , behavior that can arise where the provision of pollution control services increases the salary, prestige, and other perquisites of decision makers. The possible existence and magnitudes of the effects suggested by the model are then respectively examined by considering actual and simulated environmental management programs. The statistical evidence considered suggests that public-sector polluters may participate in a manner somewhat different from private-sector polluters under programs relying upon economic incentives. Because the available data are very limited, however, it is not possible to conclude that this difference, while consistent with bureaucratic incentives, is actually caused by them and not by other factors. The simulations suggest that even in the presence of bureaucratic distortions, programs relying upon economic incentives are likely to be less costly than direct regulations.

Suggested Citation

  • Randolph M. Lyon, 1990. "Regulating Bureaucratic Polluters," Public Finance Review, , vol. 18(2), pages 198-220, April.
    • Handle: RePEc:sae:pubfin:v:18:y:1990:i:2:p:198-220
    DOI: 10.1177/109114219001800204
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    References listed on IDEAS

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    1. Oates, Wallace E. & Strassmann, Diana L., 1984. "Effluent fees and market structure," Journal of Public Economics, Elsevier, vol. 24(1), pages 29-46, June.
    2. Maloney, Michael T. & Yandle, Bruce, 1984. "Estimation of the cost of air pollution control regulation," Journal of Environmental Economics and Management, Elsevier, vol. 11(3), pages 244-263, September.
    3. Lee, Dwight R, 1983. "Monitoring and Budget Maximization on the Control of Pollution," Economic Inquiry, Western Economic Association International, vol. 21(4), pages 565-575, October.
    4. Oates, Wallace E. & Strassmann, Diana L., 1978. "The use of effluent fees to regulate public sector sources of pollution An application of the niskanen model," Journal of Environmental Economics and Management, Elsevier, vol. 5(3), pages 283-291, September.
    5. Harford, Jon D, 1985. "Monitoring and Budget Maximization in the Control of Pollution: Comment," Economic Inquiry, Western Economic Association International, vol. 23(2), pages 357-360, April.
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    Cited by:

    1. Bruce Yandle, 1999. "Public Choice at the Intersection of Environmental Law and Economics," European Journal of Law and Economics, Springer, vol. 8(1), pages 5-27, July.

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