Electoral Incentives and Firm Behavior: Evidence from U.S. Power Plant Pollution Abatement

Matthew Doyle, Corrado Di Maria, Ian Lange and Emiliya Lazarova

No 6127, CESifo Working Paper Series from CESifo

Abstract: Researchers have utilized the fact that many states have term limits (as opposed to being eligible for re-election) for governors to determine how changes in electoral incentives alter state regulatory agency behavior. This paper asks whether these impacts spill over into private sector decision-making. Using data from gubernatorial elections in the U.S., we find strong evidence that power plants spend less in water pollution abatement if the governor of the state where the plant is located is a term-limited democrat. We show that this evidence is consistent with compliance cost minimization by power plants reacting to changes in the regulatory enforcement. Finally, we show that the decrease in spending has environmental impacts as it leads to increased pollution.

Keywords: political economy; electoral incentives; term limits; environmental policy; pollution abatement; compliance costs; power plants; water pollution; regression discontinuity (search for similar items in EconPapers)
JEL-codes: H32 H76 Q25 Q53 Q58 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Electoral Incentives and Firm Behavior: Evidence from U.S. Power Plant Pollution Abatement (2016)
Working Paper: Electoral incentives and firm behavior: Evidence from U.S. power plant pollution abatement (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6127

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