Enforcement spillovers: Lessons from strategic interactions in regulation and product markets

Mary Evans, Scott Gilpatric () and Jay Shimshack
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Scott Gilpatric: Department of Economics, University of Tennessee

No 2015-08, Working Papers from University of Tennessee, Department of Economics

Abstract: We explore mechanisms driving enforcement spillovers - when sanctions at one entity influence behavior at other entities. Our model illustrates when spillovers arise from a regulatory channel and when they arise from a channel not emphasized in the existing literature: product markets. Using facility-by-month data from Clean Water Act manufacturers, we find that penalties generate strong positive spillovers for other facilities facing the same authority. We find suggestive evidence that penalties generate negative spillovers for facilities in the same industry but facing a different authority. Results are consistent with spillovers driven by strategic interactions in both regulation and product markets.

Keywords: general deterrence; strategic substitutes; strategic complements; pollution policy (search for similar items in EconPapers)
JEL-codes: E32 R10 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2015-08
New Economics Papers: this item is included in nep-com, nep-cse, nep-mac and nep-reg
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http://web.utk.edu/~jhollad3/RePEc/2015-08.pdf First version, 2015 (application/pdf)

Related works:
Journal Article: Enforcement Spillovers: Lessons from Strategic Interactions in Regulation and Product Markets (2018)
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