We consider environmental regulation of n risk-averse, multiple pollutant firms. We develop a yardstick competition scheme where the regulatory scheme depends on the difference between a firm's aggregate performance and the average aggregate performance of the industry. Whether this instrument...

We consider an inspection game between "n" polluting firms and an environmental enforcement agency. If the cost of monitoring ambient pollution is low enough, the optimal inspection policy consists in imposing the maximal possible fine, and mixing between observing ambient pollution and not...

We compare experimentally a traditional random inspection policy and a variant where the agency may carry out a preliminary inspection of the level of ambient pollution before implementing any individual inspection. Since the agency may have an incentive to announce high inspection probabilities...