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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Mendola, Mariapia / Requate, Till / Zulehner, Christine / Schirle, Tammy

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Rational or Confused Polluters? Evidence from Hazardous Waste Compliance

Sarah L Stafford1

1College of William and Mary,

Citation Information: The B.E. Journal of Economic Analysis & Policy. Volume 5, Issue 1, ISSN (Online) 1935-1682, ISSN (Print) 2194-6108, DOI: 10.1515/1538-0645.1623, July 2006

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Although most models of environmental compliance are based on a variation of the rational polluter model, regulated entities may not always intentionally decide to violate based on the relative costs and benefits of doing so. According to the complexity critique, a significant amount of noncompliance may be the result of ignorance about the requirements of the law. Using hazardous waste regulations as a case study, this paper examines the role that rationality and complexity play in environmental compliance. The results suggest that both are necessary to explain hazardous waste compliance behavior. In support of the rational polluter model, the results show that factors which increase the cost of compliance also increase the likelihood of a violation while factors that increase the likelihood of inspections and detection decrease the probability of a violation. In support of the complexity critique, the results show that larger facilities and facilities of multi-plant companies are less likely to violate, while facilities that are subject to more complex regulations are more likely to violate. Also in support of the complexity critique, facilities learn from past inspections and facilities in states with programs directed toward reducing complexity are less likely to violate. This mixed support holds across various subgroup of facilities, although there does appear to be some difference in the factors that contribute to different types of violations. In particular, non-management violations appear to be driven less by a rational comparison of the costs and benefits of violations than by the complexity of regulations.

Keywords: corporate environmental behavior; compliance; enforcement; hazardous waste; rational polluter; complexity critique

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