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Informal Regulation of Industrial Pollution in Developing Countries: Evidence from Indonesia

Sheoli Pargal, David Wheeler

Journal of Political Economy · 1996 · Volume 104 · Issue 6

DOI: 10.1086/262061

Abstract

When formal regulation is weak or absent, communities often use other channels to induce pollution abatement by local factories in a process of "informal regulation." The resulting "pollution equilibrium" reflects the relative bargaining power of the community and the plant. This note uses Indonesian data from 1989-90 on plant-level organic water pollution to test the informal regulation hypothesis.

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