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There is a clear target and roadmap for the peaking of carbon emissions and achievement of carbon neutrality, and prior to this target being reached, penalties have been formulated to supervise enterprises and prompt green innovation. This study aimed to investigate the transmission mechanism between environmental penalties and green innovation using an empirical econometrical model and two sets of samples—punished firms and heavily polluting listed firms—amounting to 520 punished firms and 6043 firm-year observations. The main conclusions were threefold. Firstly, regarding the panel data, of the three parameters, namely, the times of penalties, the number of penalty fines, and the intensity of the penalty, only the number of penalty fines were statistically significant in terms of green innovation, indicating that only the hypothesis that, the higher the number of environmental penalties, the greater the green innovation that could be supported. Secondly, from a longitudinal perspective, there was one spontaneous effect on green patents, but the effect faded quickly in the second year after the punishment, indicating that firms did not seek green innovation as the solution for environmental penalties from a long-term perspective. Thirdly, the case number of external penalties in a province was significantly statistically associated with green innovation under an intertwined effect of the actual controller and shareholders. Therefore, there was a spillover of the deterrence effect from external penalties, with a higher number of penalty cases in a province corresponding to greater green innovation but with a very subtle coefficient. In addition, taking the median as the benchmark for group division, the group smaller than the median was statistically significant, while the group with a higher number of external penalties was not statistically significant, suggesting that firms were used to the penalties issued by environmental authorities.

Applying the rational choice model of crime, this study estimates the optimality of sanctions for environmental crimes, the social cost of these crimes and the expected gain to the offender with Finnish court data from 327 criminal cases in the period 2013–2018. Sensitivity analyses are conducted for the optimal fine, the expected gain from the crime and its social cost. The time-lag and uncertainties related to the restoration of the environmental harm are explicitly included in the model and the empirical analysis. The average fine was much lower than the optimal fine even when taking into account the constraint posed by the offenders’ wealth and disregarding the time-lag and uncertainties related to the restoration of the environmental harm. The use of prison sentences was also suboptimal. Even when the illegal gain was fully forfeited, the expected gain from the crime to the offender remained positive. Our results suggest a need to increase the cost of punishment by higher fines and reliable forfeiture of the illegal economic gain. They also point to the importance of systematically estimating both the environmental damage and the illegal gain from the crime as these were available respectively for only 24% (N = 79) and 3% (N = 11) of all cases.

The response to the penalty for an environmental violation on the firm level is a matter of reactive corporate environmental practices, about which the existence of a penalty is critical for environmental public policy. We propose that a penalty acts as a deterrence signal to enhance the perceived threat of legal punishment and the peer effect serves as the path through which peer firms learn from target firms. Based on the peer effect among firms and the deterrence effect in criminal economics, we investigated whether and how the peer firm responds to the penalty for environmental violation of target firms in the same industrial sector. Using samples of Chinese listed firms from 2008 to 2015, this paper finds that the penalty for the target firms can increase the peer firms’ environmental investment, and compared to the sample with low-level environmental regulation, the increase in the sample with high-level environmental regulation is more significant. These findings suggest that a penalty for target firms has a deterrence effect on peer firms and the environmental regulation strengthens the above deterrence effect. This is expected to help both theorists and practitioners achieve a better understanding of the implementation of a penalty for an environmental violation.

This article makes a bridge between the theory of optimal auditing and the scoring methodology in an asymmetric information setting. Our application is meant for insurance claims fraud, but it can be applied to many other activities that use the scoring approach. Fraud signals are classified based on the degree to which they reveal an increasing probability of fraud. We show that the optimal auditing strategy takes the form of a \"red flags strategy,\" which consists in referring claims to a special investigative unit (SIU) when certain fraud indicators are observed. The auditing policy acts as a deterrence device, and we explain why it requires the commitment of the insurer and how it should affect the incentives of SIU staffs. The characterization of the optimal auditing strategy is robust to some degree of signal manipulation by defrauders as well as to the imperfect information of defrauders about the audit frequency. The model is calibrated with data from a large European insurance company. We show that it is possible to improve our results by separating different groups of insureds with different moral costs of fraud. Finally, our results indicate how the deterrence effect of the audit scheme can be taken into account and how it affects the optimal auditing strategy.

In a right-to-manage framework, this paper analyzes the optimal choice of the pay scheme (profit sharing vs. fixed wage) in a unionized duopoly with potential market entry and decentralized bargaining. The paper shows that, depending on the institutional features, both pay systems can arise as equilibria in Nash strategies. Under duopoly with committed bargaining, the fixed wage is the Nash equilibrium; with flexible bargaining, an agreement between the incumbent firm and its union about profit sharing arises as Nash equilibrium, if the union is not too strong. A monopoly with threat of entry reinforces the selection of profit sharing as a deterrent mechanism.

Eighteen years ago, the Dutch leniency programme was introduced. The success of the leniency programme is closely linked to the developments around damages claims and firms’ awareness of the impact of other forms of damages. This article looks at past developments in cartel enforcement policy, the impact of damages claims, and deterrent effect of the leniency programme on new and existing cartels and its impact on the number of cartel cases in the Netherlands. It seems that private damages claims are growing up fast, and may well outgrow their younger sibling in terms of their deterrent effect. Keywords: leniency; ACM; private damages; deterrence effect; whistle blower

The world is in a second nuclear age in which regional powers play an increasingly prominent role. These states have small nuclear arsenals, often face multiple active conflicts, and sometimes have weak institutions. How do these nuclear states-and potential future ones-manage their nuclear forces and influence international conflict? Examining the reasoning and deterrence consequences of regional power nuclear strategies, this book demonstrates that these strategies matter greatly to international stability and it provides new insights into conflict dynamics across important areas of the world such as the Middle East, East Asia, and South Asia. Vipin Narang identifies the diversity of regional power nuclear strategies and describes in detail the posture each regional power has adopted over time. Developing a theory for the sources of regional power nuclear strategies, he offers the first systematic explanation of why states choose the postures they do and under what conditions they might shift strategies. Narang then analyzes the effects of these choices on a state's ability to deter conflict. Using both quantitative and qualitative analysis, he shows that, contrary to a bedrock article of faith in the canon of nuclear deterrence, the acquisition of nuclear weapons does not produce a uniform deterrent effect against opponents. Rather, some postures deter conflict more successfully than others. Nuclear Strategy in the Modern Eraconsiders the range of nuclear choices made by regional powers and the critical challenges they pose to modern international security.

Greenhouse gas removal (GGR) techniques appear to offer hopes of balancing limited global carbon budgets by removing substantial amounts of greenhouse gases from the atmosphere later this century. This hope rests on an assumption that GGR will largely supplement emissions reduction. The paper reviews the expectations of GGR implied by integrated assessment modelling, categorizes ways in which delivery or promises of GGR might instead deter or delay emissions reduction, and offers a preliminary estimate of the possible extent of three such forms of ‘mitigation deterrence’. Type 1 is described as ‘substitution and failure’: an estimated 50–229 Gt-C (or 70% of expected GGR) may substitute for emissions otherwise reduced, yet may not be delivered (as a result of political, economic or technical shortcomings, or subsequent leakage or diversion of captured carbon into short-term utilization). Type 2, described as ‘rebounds’, encompasses rebounds, multipliers, and side-effects, such as those arising from land-use change, or use of captured CO2 in enhanced oil recovery. A partial estimate suggests that this could add 25–134 Gt-C to unabated emissions. Type 3, described as ‘imagined offsets’, is estimated to affect 17–27% of the emissions reductions required, reducing abatement by a further 182–297 Gt-C. The combined effect of these unanticipated net additions of CO2 to the atmosphere is equivalent to an additional temperature rise of up to 1.4 °C. The paper concludes that such a risk merits further deeper analysis and serious consideration of measures which might limit the occurrence and extent of mitigation deterrence.

We estimate the causal real economic effects of a randomized anti-corruption crackdown on local governments in Brazil using rich micro-data on corruption and firms. After anti-corruption audits, municipalities experience an increase in the number of firms concentrated in sectors most dependent on government relationships and public procurement. Through the estimation of geographic spillovers and additional tests, we show that audits operate via both a direct detection effect as well as through indirect deterrence channels. Politically connected firms suffer after the audits. Our estimates indicate the anticorruption program generates significant local multipliers which are consistent with the presence of a large corruption tax on government-dependent firms.