An estimate of the producer cost of liability for oil spills

Peter Maniloff

Applied Economics Letters, 2018, vol. 25, issue 5, 348-353

Abstract: Governments often impose liability for environmental harms on firms when direct monitoring of operations is difficulty or costly. In the case of oil production, little is known about the private cost of liability. This article takes advantage of a natural experiment to estimate the loss in projected future profits of oil and gas production after the Oil Pollution Act of 1990, which imposed liability on some producers and was exogenously timed in response to the Exxon Valdez spill. I find no evidence of economically substantial firm costs of the Oil Pollution Act’s liability rule.

Date: 2018
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DOI: 10.1080/13504851.2017.1321833

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