Does Voluntary Self-Regulation Provide Regulatory Relief? A Lesson from the Responsible Care Program in the United States

Huan Li () and Neha Khanna

Journal of Law and Economics, 2018, vol. 61, issue 1, 63 - 96

Abstract: We investigate whether firms are rewarded for their participation in voluntary self-regulation programs through more lenient enforcement of mandated regulation. In particular, we investigate whether firms participating in the Responsible Care (RC) program experience less pressure from Occupational Safety and Health Administration inspections. We use three indicators of regulatory relief: the overall probability of an inspection regardless of its type, the probability of a planned inspection relative to other inspection types, and the intensity of planned inspections. The probability of a planned inspection is our primary indicator of regulatory relief because it is the only inspection type that is not triggered by facilities' contemporaneous performance. We find strong evidence of regulatory relief: RC participants experienced fewer and possibly more lenient planned inspections than non-RC participants. While this was not enough to lower the overall probability of an inspection, the greater stringency of planned inspections translates into significantly less regulatory attention.

Date: 2018
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