Socioeconomic Disparities in Privatized Pollution Remediation: Evidence from Toxic Chemical Spills

Justin Marion and Jeremy West

American Economic Journal: Applied Economics, 2024, vol. 16, issue 3, 219-49

Abstract: Governments often privatize the administration of regulations to third-party specialists paid for by the regulated parties. We study how the resulting conflict of interest can have unintended consequences for the distributional impacts of regulation. In Massachusetts, the party responsible for hazardous waste contamination must hire a licensed contractor to quantify the environmental severity. We find that contractors' evaluations favor their clients, exhibiting substantial score bunching just below thresholds that determine government oversight of the remediation. Client favoritism is more pronounced in socioeconomically disadvantaged neighborhoods and is associated with inferior remediation quality, highlighting a novel channel for inequities in pollution exposure.

JEL-codes: D63 J15 K32 L51 Q53 R23 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Socioeconomic Disparities in Privatized Pollution Remediation: Evidence from Toxic Chemical Spills (2024)
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DOI: 10.1257/app.20220295

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