Modelling compliance in a groundwater pollution problem

A game-theoretic model is developed for improving compliance to environmental laws and regulations in a groundwater pollution conflict, showing how regulatory agencies can carry out their mandate without incurring extra costs. This research provides a comprehensive analysis of the possible compliance decisions by a regulated firm in the context of its relationship with an environmental agency. More specifically, the enforcement problem is modelled as a noncooperative game called the enforcement trilemma. The cost-effectiveness of inducing compliance to groundwater pollution regulations is systematically assessed in terms of factors such as the private gain for violators, the costs of inspection for agencies and the social value of encouraging more sustainable development. Systematic policy development for regulatory agencies, especially with reference to environmental protection, is emphasized