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Escalation of Scrutiny: The Gains from Dynamic Enforcement of Environmental Regulations

Wesley Blundell, Gautam Gowrisankaran and Ashley Langer

No 24810, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The U.S. Environmental Protection Agency uses a dynamic approach to enforcing air pollution regulations, with repeat offenders subject to high fines and designation as high priority violators (HPV). We estimate the value of dynamic enforcement by developing and estimating a dynamic model of a plant and regulator, where plants decide when to invest in pollution abatement technologies. We use a fixed grid approach to estimate random coefficient specifications. Investment, fines, and HPV designation are costly to most plants. Eliminating dynamic enforcement would raise pollution damages by 164% with constant fines or raise fines by 519% with constant pollution damages.

JEL-codes: C57 Q53 Q58 (search for similar items in EconPapers)
Date: 2018-07
New Economics Papers: this item is included in nep-ene, nep-env, nep-law, nep-reg and nep-res
Note: EEE IO PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published as Wesley Blundell & Gautam Gowrisankaran & Ashley Langer, 2020. "Escalation of Scrutiny: The Gains from Dynamic Enforcement of Environmental Regulations," American Economic Review, vol 110(8), pages 2558-2585.

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