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The Clean Air Act Amendments and Firm Investment in Pollution Abatement Equipment


  • Amanda I. Lee
  • AJames Alm


The command-and-control approach to environmental regulation requires that firms install prescribed technologies to meet specified goals. However, environmental regulations change frequently; in addition, the enforcement agency cannot perfectly monitor firm compliance. We examine the impact of uncertainties surrounding the enactment and the enforcement of the Clean Air Act Amendments of 1990 on firm investment in air pollution abatement equipment. We find that our measures of the likelihood ofCAAA passage clearly affect a firm’s investment in pollution equipment. Enforcement actions also affect a firm’s investment, but these effects are weaker and are statistically significant only after enactment.

Suggested Citation

  • Amanda I. Lee & AJames Alm, 2004. "The Clean Air Act Amendments and Firm Investment in Pollution Abatement Equipment," Land Economics, University of Wisconsin Press, vol. 80(3), pages 433-447.
  • Handle: RePEc:uwp:landec:v:80:y:2004:i:3:p:433-447

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    References listed on IDEAS

    1. Agrawal, Arun, 2001. "Common Property Institutions and Sustainable Governance of Resources," World Development, Elsevier, vol. 29(10), pages 1649-1672, October.
    2. Anders Skonhoft & Jan Tore Solstad, 1998. "The Political Economy of Wildlife Exploitation," Land Economics, University of Wisconsin Press, vol. 74(1), pages 16-31.
    3. Skonhoft, Anders & Solstad, Jan Tore, 1996. "Wildlife management, illegal hunting and conflicts. A bioeconomic analysis," Environment and Development Economics, Cambridge University Press, vol. 1(02), pages 165-181, May.
    4. Brown, David N & Pomeroy, Robert S, 1999. "Co-management of Caribbean Community (CARICOM) fisheries," Marine Policy, Elsevier, vol. 23(6), pages 549-570, November.
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    Cited by:

    1. Jaraite, Jurate & Kažukauskas, Andrius & Lundgren, Tommy, 2012. "Determinants of Environmental Expenditure and Investment: Evidence from Sweden," CERE Working Papers 2012:7, CERE - the Center for Environmental and Resource Economics.
    2. Wilson, Nathan E., 2012. "Uncertain regulatory timing and market dynamics," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 102-115.
    3. Stefanie Haller & Liam Murphy, 2012. "Corporate Expenditure on Environmental Protection," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(2), pages 277-296, February.

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    JEL classification:

    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices


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