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Compliance costs, regulation, and environmental performance: Controlling truck emissions in the US

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  • Dorothy Thornton
  • Robert A. Kagan
  • Neil Gunningham

Abstract

When explaining regulatory policymaking and the behavior of regulated business firms, scholars have supplemented economic models by emphasizing the role of public‐regarding entrepreneurial politics and of normative pressures on firms. This article explores the limits of such entrepreneurial politics and “social license” pressures by examining regulation of emissions from diesel powered trucks in the US. We find that the economic cost of obtaining the best available control technology – new model lower emissions engines – has: (i) limited the stringency and coerciveness of direct regulation of vehicle owners and operators; (ii) dwarfed the reach and effectiveness of the governmental programs that subsidize the purchase of new less polluting vehicles; and (iii) elevated the importance of each company’s “economic license”– as opposed to its “social license”– in shaping its environmental performance. The prominence of this “regulatory compliance cost” variable in shaping both regulation and firm behavior, we conclude, is likely to recur in highly competitive markets, like trucking, that include many small firms that cannot readily either afford or pass on the cost of best available compliance technologies.

Suggested Citation

  • Dorothy Thornton & Robert A. Kagan & Neil Gunningham, 2008. "Compliance costs, regulation, and environmental performance: Controlling truck emissions in the US," Regulation & Governance, John Wiley & Sons, vol. 2(3), pages 275-292, September.
    • Handle: RePEc:wly:reggov:v:2:y:2008:i:3:p:275-292
    DOI: 10.1111/j.1748-5991.2008.00043.x
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    1. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    2. Farber, Daniel A, 1992. "Politics and Procedure in Environmental Law," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 8(1), pages 59-81, March.
    3. Hahn, Robert W. (ed.), 1996. "Risks, Costs, and Lives Saved: Getting Better Results from Regulation," OUP Catalogue, Oxford University Press, number 9780195211740.
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    Cited by:

    1. Montgomery, Laura & McLaughlin, Patrick, 2019. "Performance Standards vs. Design Standards: Facilitating a Shift toward Best Practices," Working Papers 07815, George Mason University, Mercatus Center.

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