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Enforcement and Over-Compliance

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Author Info

  • Jay P. Shimshack
  • Michael B. Ward

Abstract

Economists generally view environmental enforcement as a tool to secure compliance with regulations. This paper demonstrates that credible enforcement significantly increases statutory overcompliance with regulations as well. We find that many plants with discharges typically below legally permitted levels reduce discharges further when regulators issue fines, even on other plants. Also, likely non-compliant plants often respond to sanctions by reducing discharges well beyond reductions required by law. Thus, increased enforcement generates substantial discharge reductions above and beyond those expected from simply deterring violations.

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File URL: http://ase.tufts.edu/econ/research/documents/2007/shimshackOverCompliance.pdf
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Bibliographic Info

Paper provided by Department of Economics, Tufts University in its series Discussion Papers Series, Department of Economics, Tufts University with number 0706.

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Date of creation: 2007
Date of revision:
Handle: RePEc:tuf:tuftec:0706

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Web page: http://ase.tufts.edu/econ

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Keywords: Over-compliance; Fines; Compliance; Enforcement; Regulation; Pollution Policy;

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References

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  1. Stefanie Kirchhoff, 2000. "Green Business and Blue Angels," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 15(4), pages 403-420, April.
  2. Nadeau, Louis W., 1997. "EPA Effectiveness at Reducing the Duration of Plant-Level Noncompliance," Journal of Environmental Economics and Management, Elsevier, vol. 34(1), pages 54-78, September.
  3. Arora Seema & Cason Timothy N., 1995. "An Experiment in Voluntary Environmental Regulation: Participation in EPA's 33/50 Program," Journal of Environmental Economics and Management, Elsevier, vol. 28(3), pages 271-286, May.
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  5. Magat, Wesley A & Viscusi, W Kip, 1990. "Effectiveness of the EPA's Regulatory Enforcement: The Case of Industrial Effluent Standards," Journal of Law and Economics, University of Chicago Press, vol. 33(2), pages 331-60, October.
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  8. Stafford, Sarah L., 2002. "The Effect of Punishment on Firm Compliance with Hazardous Waste Regulations," Journal of Environmental Economics and Management, Elsevier, vol. 44(2), pages 290-308, September.
  9. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
  10. Earnhart, Dietrich, 2004. "Regulatory factors shaping environmental performance at publicly-owned treatment plants," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 655-681, July.
  11. Gray, Wayne B. & Deily, Mary E., 1996. "Compliance and Enforcement: Air Pollution Regulation in the U.S. Steel Industry," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 96-111, July.
  12. Alberto Cavaliere, 2000. "Overcompliance and Voluntary Agreements," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 17(2), pages 195-202, October.
  13. Philippe Van Kerm, 2003. "Adaptive kernel density estimation," United Kingdom Stata Users' Group Meetings 2003 15, Stata Users Group.
  14. 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.
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  17. Seema Arora & Timothy N. Cason, 1996. "Why Do Firms Volunteer to Exceed Environmental Regulations? Understanding Participation in EPA's 33/50 Program," Land Economics, University of Wisconsin Press, vol. 72(4), pages 413-432.
  18. Beavis, Brian & Walker, Martin, 1983. "Achieving environmental standards with stochastic discharges," Journal of Environmental Economics and Management, Elsevier, vol. 10(2), pages 103-111, June.
  19. John D. McClelland & John K. Horowitz, 1999. "The Costs of Water Pollution Regulation in the Pulp and Paper Industry," Land Economics, University of Wisconsin Press, vol. 75(2), pages 220-232.
  20. Bandyopadhyay Sushenjit & Horowitz John, 2006. "Do Plants Overcomply with Water Pollution Regulations? The Role of Discharge Variability," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(1), pages 1-32, January.
  21. Dietrich Earnhart, 2004. "The Effects of Community Characteristics on Polluter Compliance Levels," Land Economics, University of Wisconsin Press, vol. 80(3), pages 408-432.
  22. Seema Arora & Timothy N. Cason, 1999. "Do Community Characteristics Influence Environmental Outcomes? Evidence from the Toxics Release Inventory," Southern Economic Journal, Southern Economic Association, vol. 65(4), pages 691-716, April.
  23. 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.
  24. Arora, Seema & Gangopadhyay, Shubhashis, 1995. "Toward a theoretical model of voluntary overcompliance," Journal of Economic Behavior & Organization, Elsevier, vol. 28(3), pages 289-309, December.
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Citations

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Cited by:
  1. Bandyopadhyay Sushenjit & Horowitz John, 2006. "Do Plants Overcomply with Water Pollution Regulations? The Role of Discharge Variability," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(1), pages 1-32, January.
  2. Mieno, Taro & Brozovic, Nicholas, 2012. "Unraveling deterrence effects of regulatory activities under Clean Water Act," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124612, Agricultural and Applied Economics Association.
  3. Guglielmo Caporale & Christophe Rault & Robert Sova & Anamaria Sova, 2010. "Pollution Abatement And Control Expenditure In Romania: A Multilevel Analysis," William Davidson Institute Working Papers Series wp994, William Davidson Institute at the University of Michigan.
  4. Hugh McDonald & Suzi Kerr, 2011. "Trading Efficiency in Water Quality Trading Markets: An Assessment of Trade-Offs," Working Papers 11_15, Motu Economic and Public Policy Research.
  5. Markus Kitzmueller & Jay Shimshack, 2012. "Economic Perspectives on Corporate Social Responsibility," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 51-84, March.
  6. 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.
  7. 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.
  8. Wu JunJie & Wirkkala Teresa M., 2009. "Firms' Motivations for Environmental Overcompliance," Review of Law & Economics, De Gruyter, vol. 5(1), pages 399-433, June.
  9. Arguedas, Carmen & Rousseau, Sandra, 2012. "Learning about compliance under asymmetric information," Resource and Energy Economics, Elsevier, vol. 34(1), pages 55-73.
  10. Karanfil, Fatih, 2010. "Environmental regulation in the presence of unrecorded economy," GIAM Working Papers 10-2, Galatasaray University Economic Research Center, revised 2010.
  11. Bouwe R. Dijkstra & Dirk T.G. Rübbelke, . "Group rewards and individual sanctions in environmental policy," Discussion Papers 07/01, University of Nottingham, School of Economics.
  12. Lin, Liguo, 2013. "Enforcement of pollution levies in China," Journal of Public Economics, Elsevier, vol. 98(C), pages 32-43.
  13. Ujjayant Chakravorty & Céline Nauges & Henry Thille, 2012. "Gasoline Content Regulation and Compliance among US Refineries," CESifo Working Paper Series 3978, CESifo Group Munich.
  14. Evans, Mary F. & Gilpatric, Scott M. & Liu, Lirong, 2009. "Regulation with direct benefits of information disclosure and imperfect monitoring," Journal of Environmental Economics and Management, Elsevier, vol. 57(3), pages 284-292, May.
  15. Shital Sharma, 2013. "Environmental Regulation, Abatement, and Productivity: A Frontier Analysis," Working Papers 13-51, Center for Economic Studies, U.S. Census Bureau.
  16. Erin Marie Reid & Michael W. Toffel, 2008. "Responding to Public and Private Politics: Corporate Disclosure of Climate Change Strategies," Harvard Business School Working Papers 09-019, Harvard Business School, revised Jun 2009.

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