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Analysis of Firm Compliance with Multiple Environmental regulations

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  • Lirong Liu

    ()
    (Sam Houston State University)

Abstract

When a firm is regulated by multiple environmental programs, the firm may manage its compliance with these programs systematically so that the regulation of one program can affect firm decisions regarding compliance with other programs. Faced with budget constraints on compliance expenditure, a firm is likely to reduce its compliance with one program when certain incentives to comply better with another program arises. Such incentives can include more frequent inspection or higher penalties under another program. This paper examines the existence of such negative spillover effects across programs. A fixed effects model is estimated using data on facilities regulated under CAA (Clean Air Act) and RCRA (Reservation and Conservation Recovery Act). Results confirm negative spillover effects. Increases in RCRA penalties as well increases in RCRA inspections on other facilities result in facilities complying less with CAA regulations.

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File URL: http://www.accessecon.com/Pubs/EB/2013/Volume33/EB-13-V33-I3-P158.pdf
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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 33 (2013)
Issue (Month): 3 ()
Pages: 1695-1705

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Handle: RePEc:ebl:ecbull:eb-13-00038

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Related research

Keywords: air pollution; hazardous waste pollution; compliance; complementary; substitution;

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  1. Eric Helland, 1998. "The Enforcement Of Pollution Control Laws: Inspections, Violations, And Self-Reporting," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 141-153, February.
  2. Wayne B. Gray & Ronald J. Shadbegian, 2007. "The Environmental Performance Of Polluting Plants: A Spatial Analysis," Journal of Regional Science, Wiley Blackwell, vol. 47(1), pages 63-84.
  3. Harford, Jon D., 1991. "Measurement error and state-dependent pollution control enforcement," Journal of Environmental Economics and Management, Elsevier, vol. 21(1), pages 67-81, July.
  4. Wayne B. Gray & Jay P. Shimshack, 2011. "The Effectiveness of Environmental Monitoring and Enforcement: A Review of the Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 3-24, Winter.
  5. Gamper-Rabindran, Shanti, 2006. "Did the EPA's voluntary industrial toxics program reduce emissions? A GIS analysis of distributional impacts and by-media analysis of substitution," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 391-410, July.
  6. Dietrich Earnhart, 2004. "Panel Data Analysis of Regulatory Factors Shaping Environmental Performance," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 391-401, February.
  7. Dietrich Earnhart, 2004. "The Effects of Community Characteristics on Polluter Compliance Levels," Land Economics, University of Wisconsin Press, vol. 80(3), pages 408-432.
  8. Shimshack, Jay P. & Ward, Michael B., 2005. "Regulator reputation, enforcement, and environmental compliance," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 519-540, November.
  9. Louis Kaplow & Steven Shavell, 1991. "Optimal Law Enforcement with Self-Reporting of Behavior," NBER Working Papers 3822, National Bureau of Economic Research, Inc.
  10. Laplante, Benoit & Rilstone, Paul, 1996. "Environmental Inspections and Emissions of the Pulp and Paper Industry in Quebec," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 19-36, July.
  11. Hilary Sigman, 1996. "Cross-Media Pollution: Responses to Restrictions on Chlorinated Solvent Releases," Land Economics, University of Wisconsin Press, vol. 72(3), pages 298-312.
  12. Decker, Christopher S. & Pope, Christopher R., 2005. "Adherence to environmental law: the strategic complementarities of compliance decisions," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(4-5), pages 641-661, September.
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