STRATEGIC BEHAVIORS TOWARD ENVIRONMENTAL REGULATION: A CASE OF TRUCKING INDUSTRY

Terence Lam and Charles Bausell

Contemporary Economic Policy, 2007, vol. 25, issue 1, 3-13

Abstract: We used trucking industry’s response to the U.S. Environmental Protection Agency’s acceleration of 2004 diesel emissions standards as a case study to examine the importance of accounting for regulatees’ strategic behaviors in drafting of environmental regulations. Our analysis of the time series data of aggregate U.S. and Canada heavy‐duty truck production data from 1992 through 2003 found that heavy‐duty trucks production increased by 20%–23% in the 6 mo prior to the date of compliance. The increases might be due to truck operators pre‐buying trucks with less expensive but noncompliant engines and behaving strategically in anticipation of other uncertainties. (JEL L51, Q25)

Date: 2007
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