Final answer:
Regulatory fines for serious breaches are classified as formal sanctions under command-and-control regulation, which require companies to comply with environmental standards and bear the social costs of pollution. Fines, such as those from OSHA, are determined based on the severity of the breach and the company's profile.
Step-by-step explanation:
Regulatory fines for serious breaches, such as those involving environmental regulations, can be characterized as formal sanctions within command-and-control regulation frameworks. These fines are part of a system that includes specific limits on pollution emissions and mandates the installation of anti-pollution equipment to ensure that firms take into account the social costs of pollution.
For instance, the Occupational Safety and Health Administration's (OSHA) inspection process may result in citations and fines if an employer violates standards or exposes workers to serious hazards. The maximum fines, although comparatively low, reflect the gravity of the violation, the size of the business, and the history of previous violations. Such formal sanctions provide official recognition and enforcement of norm violations with the aim of correcting the breach and preventing future infractions.
However, it is important to note that while command-and-control regulation is effective in stipulating pollution limits and imposing fines, it has limitations, including the lack of incentives for firms to exceed such limits, limited flexibility in pollution reduction methods, and potential politically-motivated loopholes.