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Department Economics, Swedish University of Agricultural Sciences Working Paper Series, Department Economics, Swedish University of Agricultural Sciences

No 2014:4:
Violation of environmental regulations as a disinvestment in social capital

Ing-Marie Gren (), Mikael Andersson Franko and Fredrik Holstein

Abstract: This paper developed a simple dynamic model in order to analyse the impact of social capital on violation of environmental regulations. Two main channels of influence were identified; through informal enforcement of regulations and through effects on costs from disinvestment in social capital caused by violation. The model was tested using survey data on enforcement and violation of command and control regulations at municipalities and counties in Sweden. Four different measures on the social capital variable were used; general trust, trust in local and national governments, and organizational activity. Count data models were used for estimating the explanatory power of these variables in relation to inspection frequency and control variables of community characteristics. Statistically best results were obtained for organizational activity for all firm categories. The results showed that both the level of this social capital measure and its growth over time curb violation.

Keywords: social capital; violation of environmental regulations; econometric test; count data model; Sweden; (follow links to similar papers)

JEL-Codes: K33; K42; Q58; (follow links to similar papers)

35 pages, April 9, 2014

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