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

71 Pages Posted: 16 Jul 2018 Last revised: 13 Aug 2021

See all articles by Wesley Blundell

Wesley Blundell

California State University, East Bay

Gautam Gowrisankaran

Columbia University; HEC Montreal; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Ashley Langer

University of Arizona

Date Written: July 2018

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.

Suggested Citation

Blundell, Wesley and Gowrisankaran, Gautam and Langer, Ashley, Escalation of Scrutiny: The Gains from Dynamic Enforcement of Environmental Regulations (July 2018). NBER Working Paper No. w24810, Available at SSRN: https://ssrn.com/abstract=3214354

Wesley Blundell (Contact Author)

California State University, East Bay

25800 Carlos Bee Boulevard
Hayward, CA 94542
United States

Gautam Gowrisankaran

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3
Canada

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Ashley Langer

University of Arizona ( email )

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
9
Abstract Views
229
PlumX Metrics