Improve Compliance with Limited Resources by a Three-Group Inspection Regime

Frequent monitoring and relatively high fines are usually necessary to bring about improvements in environmental quality, but more challenging for many countries with limited human, material, and financial resources is to put them into practice. This paper developed a three-group model of a state-dependent enforcement in a repeated game to improve the policy implementation under limited inspection capacities. A certain number of firms are grouped (group 1, group 2, group 3) for different supervision intensity (e.g., the order of inspection probability corresponding to each group is p 1