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

Matthew Doyle (), Corrado Di Maria, Ian Lange and Emiliya Lazarova
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Matthew Doyle: Division of Economics and Business, Colorado School of Mines

No 2016-09, Working Papers from Colorado School of Mines, Division of Economics and Business

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)
Pages: 28 pages
Date: 2016-10
New Economics Papers: this item is included in nep-cdm, nep-ene, nep-env, nep-pol and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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http://econbus-papers.mines.edu/working-papers/wp201609.pdf First version, 2016 (application/pdf)

Related works:
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:mns:wpaper:wp201609

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