EconPapers    
Economics at your fingertips  
 

Firms' Response and Unintended Health Consequences of Industrial Regulations

Christopher Hansman, Jonas Hjort and Gianmarco León-Ciliotta ()

No 809, Working Papers from Barcelona Graduate School of Economics

Abstract: Regulations that constrain firms' externalities in one dimension can distort incentives and worsen externalities in other dimensions. In Peru's industrial fishing sector, the world's largest, fishing boats catch anchovy that plants along the coast convert into fishmeal. Matching administrative daily data on plant production, ground-level air quality data, hospital admissions records, and survey data on individual health outcomes, we first show that fishmeal production worsens adult and child health through air pollution emitted by plants. We then analyze the industry's response to a 2009 reform that split the Total Allowable Catch (TAC) into boat-specific, transferable quotas (ITQs) to preserve fish stocks and reduce overcapacity. As predicted by a two-sector model with heterogeneous plants, on average across locations, fishmeal production was spread out in time, for two reasons: (i) boats' incentive to "race" for fish was removed, and (ii) inefficient plants decreased production and efficient plants expanded production (across time). The reform greatly exacerbated the industry's impact on health, causing e.g. 55,000 additional hospital admissions for respiratory diseases. We show that the reason is that longer periods of moderate air pollution are worse for health than shorter periods of higher intensity exposure. Our findings demonstrate the risks of piecemeal regulatory design, and that the common policy trade-off between duration and intensity of pollution exposure can be critical for industry's impact on health.

Keywords: industrial regulations; firms; Externalities; air pollution; Health; fishing; Peru; ITQs (search for similar items in EconPapers)
JEL-codes: D2 L5 L7 O1 I1 Q5 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-env
Date: 2015-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.barcelonagse.eu/sites/default/files/working_paper_pdfs/809.pdf (application/pdf)

Related works:
Working Paper: Firm's response and unintended health consequences of industrial regulations (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:809

Access Statistics for this paper

More papers in Working Papers from Barcelona Graduate School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Bruno Guallar ().

 
Page updated 2019-11-08
Handle: RePEc:bge:wpaper:809