Escalation of Scrutiny: The Gains from Dynamic Enforcement of Environmental Regulations
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PublisherAMER ECONOMIC ASSOC
CitationBlundell, Wesley, Gautam Gowrisankaran, and Ashley Langer. 2020. "Escalation of Scrutiny: The Gains from Dynamic Enforcement of Environmental Regulations." American Economic Review, 110 (8): 2558-85.
JournalAMERICAN ECONOMIC REVIEW
RightsCopyright © 2020 American Economic Association. All rights reserved.
Collection InformationThis item from the UA Faculty Publications collection is made available by the University of Arizona with support from the University of Arizona Libraries. If you have questions, please contact us at email@example.com.
AbstractThe US Environmental Protection Agency (EPA) 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 percent with constant fines or raise fines by 519 percent with constant pollution damages.
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