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Corporate Environmentalism and Environmental Statutory Permitting

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  • Decker, Christopher S

Abstract

Studies have shown that despite infrequent inspections and low penalties for statutory violations, a large fraction of firms comply with environmental restrictions. What then motivates compliance? I investigate this question by focusing on the length of time it takes environmental agencies to process and issue new source construction permits pursuant to Clean Air Act regulations and new industrial discharge permits pursuant to Clean Water Act regulations. I find that plants (or firms) with fewer instances of noncompliance receive permits for major projects more quickly. In addition, I find that permit delays are sensitive to economic conditions as well, such as local area unemployment. As far as voluntary pollution control behavior is concerned, I find that regulators that issue permits for plant modifications focus primarily on statutory compliance, but when permitting new plant construction, where there is no plant compliance history to go on, voluntary pollutant releases do matter.

Suggested Citation

  • Decker, Christopher S, 2003. "Corporate Environmentalism and Environmental Statutory Permitting," Journal of Law and Economics, University of Chicago Press, vol. 46(1), pages 103-129, April.
  • Handle: RePEc:ucp:jlawec:y:2003:v:46:i:1:p:103-29
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    File URL: http://dx.doi.org/10.1086/345586
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    References listed on IDEAS

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    1. Mary K. Olson, 1997. "Firm Characteristics and the Speed of FDA Approval," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(1), pages 377-401, June.
    2. Harford, Jon D. & Harrington, Winston, 1991. "A reconsideration of enforcement leverage when penalties are restricted," Journal of Public Economics, Elsevier, vol. 45(3), pages 391-395, August.
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    Cited by:

    1. Toshihiro Uchida & Paul Ferraro, 2007. "Voluntary development of environmental management systems: motivations and regulatory implications," Journal of Regulatory Economics, Springer, vol. 32(1), pages 37-65, August.
    2. Blackman, Allen & Guerrero, Santiago, 2012. "What drives voluntary eco-certification in Mexico?," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 256-268.
    3. Blackman, Allen, 2009. "Alternative Pollution Control Policies in Developing Countries: Informal, Informational, and Voluntary," Discussion Papers dp-09-10, Resources For the Future.
    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. 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.
    6. Blackman, Allen & Woodward, Richard T., 2010. "User financing in a national payments for environmental services program: Costa Rican hydropower," Ecological Economics, Elsevier, vol. 69(8), pages 1626-1638, June.
    7. Thomas P. Lyon & John W. Maxwell, 2014. "Self-Regulation and Regulatory Flexibility: Why Firms May be Reluctant to Signal Green," Working Papers 2014-11, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    8. Karpoff, Jonathan M & Lott, John R, Jr & Wehrly, Eric W, 2005. "The Reputational Penalties for Environmental Violations: Empirical Evidence," Journal of Law and Economics, University of Chicago Press, vol. 48(2), pages 653-675, October.
    9. Nyborg, Karine & Telle, Kjetil, 2004. "A dissolving paradox: Firms’ compliance to environmental regulation," Memorandum 02/2004, Oslo University, Department of Economics.
    10. Robert Innes & Abdoul G. Sam, 2008. "Voluntary Pollution Reductions and the Enforcement of Environmental Law: An Empirical Study of the 33/50 Program," Journal of Law and Economics, University of Chicago Press, vol. 51(2), pages 271-296, May.
    11. Lenntorp, Erik, 2009. "On the joint use of licensing and liability," International Review of Law and Economics, Elsevier, vol. 29(3), pages 244-251, September.
    12. Allen Blackman & Sarah Darley & Thomas P. Lyon & Kris Wernstedt, 2010. "What Drives Participation in State Voluntary Cleanup Programs? Evidence from Oregon," Land Economics, University of Wisconsin Press, vol. 86(4), pages 785-799.
    13. Nicola Ulibarri & Bruce E. Cain & Newsha K. Ajami, 2017. "A Framework for Building Efficient Environmental Permitting Processes," Sustainability, MDPI, Open Access Journal, vol. 9(2), pages 1-17, January.
    14. Marisa Agostini & Giovanni Favero, 2012. "Accounting fraud, business failure and creative auditing: A micro-analysis of the strange case of Sunbeam Corp," Working Papers 12, Department of Management, UniversitĂ  Ca' Foscari Venezia, revised Mar 2013.
    15. 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.

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