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The Unintended Disincentive in the Clean Air Act

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Author Info

  • List John A.

    ()
    (University of Maryland)

  • Millimet Daniel L

    ()
    (Southern Methodist University)

  • McHone Warren

    ()
    (University of Central Florida)

Abstract

The Clean Air Act and its subsequent amendments have been lauded as the primary stimulant to the impressive improvement in local air quality in the US since 1970. A key component of these regulations is the New Source Review (NSR) requirement, which includes the contentious stipulation that when an existing plant seeks to modify its operations, the entire plant must comply with current standards for new sources. This requirement was included to improve air quality in dirty areas, and prevent a deterioration of air quality in clean areas. Yet, whether NSR provides the proper plant-level incentives is unclear: there are strong disincentives to undertake major plant modifications to avoid NSR. In our examination of more than 2500 and 2200 plant-level modification decisions and closures, respectively, we find empirical evidence suggesting that NSR retards modification rates, while doing little to hasten the closure of existing dirty plants.

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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 3 (2004)
Issue (Month): 2 (February)
Pages: 1-28

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Handle: RePEc:bpj:bejeap:v:advances.4:y:2004:i:2:n:2

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Web page: http://www.degruyter.com

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Cited by:
  1. James B. Bushnell & Howard Chong & Erin T. Mansur, 2009. "Profiting from Regulation: An Event Study of the EU Carbon Market," NBER Working Papers 15572, National Bureau of Economic Research, Inc.
  2. Bushnell, James & Wolfram, Catherine, 2008. "Enforcement of Vintage Differentiated Regulations: The Case of New Source Review," Staff General Research Papers 31185, Iowa State University, Department of Economics.
  3. Nathaniel Keohane & Erin T. Mansur & Andrey Voynov, 2007. "Averting Regulatory Enforcement: Evidence from New Source Review," NBER Working Papers 13512, National Bureau of Economic Research, Inc.
  4. Michael Greenstone & John A. List & Chad Syverson, 2012. "The Effects of Environmental Regulation on the Competitiveness of U.S. Manufacturing," NBER Working Papers 18392, National Bureau of Economic Research, Inc.
  5. Ian Lange & Josh Linn, 2006. "Bush v. Gore and the Effect of New Source Review on Power Plant Emissions," Working Papers UWEC-2007-02, University of Washington, Department of Economics.
  6. Sánchez-Braza, Antonio & Pablo-Romero, María del P., 2014. "Evaluation of property tax bonus to promote solar thermal systems in Andalusia (Spain)," Energy Policy, Elsevier, vol. 67(C), pages 832-843.
  7. Heutel, Garth, 2011. "Plant vintages, grandfathering, and environmental policy," Journal of Environmental Economics and Management, Elsevier, vol. 61(1), pages 36-51, January.
  8. Anthony Heyes, 2009. "Is environmental regulation bad for competition? A survey," Journal of Regulatory Economics, Springer, vol. 36(1), pages 1-28, August.
  9. Douglas A. Carr, 2011. "The Intergovernmental Fiscal Effects of the Clean Air Act," Public Finance Review, , vol. 39(6), pages 810-830, November.
  10. Wright, Christopher, 2006. "Estimating the Effect of the Chesapeake Bay Program on Application Rates for Enrollment in the Environmental Quality Incentive Program: A Case Study of Pennsylvania," 2006 Annual meeting, July 23-26, Long Beach, CA 21164, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  11. List, John A. & McHone, W. Warren & Millimet, Daniel L., 2004. "Effects of environmental regulation on foreign and domestic plant births: is there a home field advantage?," Journal of Urban Economics, Elsevier, vol. 56(2), pages 303-326, September.
  12. Calcott, Paul, 2012. "Regulatory triggers and New Source Review," Resource and Energy Economics, Elsevier, vol. 34(3), pages 337-348.
  13. Hanna Rema Nadeem & Oliva Paulina, 2010. "The Impact of Inspections on Plant-Level Air Emissions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-33, March.
  14. O. Ashton Morgan & Simon Condliffe, 2009. "Spatial Heterogeneity in Environmental Regulation Enforcement and the Firm Location Decision among U.S. Counties," Working Papers 09-12, Department of Economics, Appalachian State University.

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