The effect of competition on toxic pollution releases

Daniel H. Simon and Jeffrey Prince

Journal of Environmental Economics and Management, 2016, vol. 79, issue C, 40-54

Abstract: We examine how competition affects toxic industrial releases, using five years of data from thousands of facilities across hundreds of industries. Our main result indicates that competition reduces toxic releases at the facility level. On average, each percentage-point reduction in the Herfindahl Index (HHI) results in a nearly two-percent reduction in a facility׳s toxic releases. At the same time, we find no evidence that competition increases aggregate pollution. Further analysis sheds some light on the mechanisms through which firms reduce pollution releases due to increased competition. In particular, we find suggestive evidence that this relationship is due to both reduced output and increases in abatement. We find no evidence that our result is driven by: consumer aversion to pollution, regulations changing with competition, or technologies introduced by new firms. Taken together, our results indicate that competition may be good, at least for public health in areas near polluting facilities, and fail to provide support for the hypothesis that competition leads to more socially undesirable behavior.

Keywords: Abatement; Competition; Concentration; Pollution; Toxics release inventory (search for similar items in EconPapers)
JEL-codes: L10 L60 M14 Q52 Q53 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:79:y:2016:i:c:p:40-54

DOI: 10.1016/j.jeem.2016.03.001

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