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Enforcement spillovers: Lessons from strategic interactions in regulation and product markets

Listed author(s):
  • Mary F. Evans

    ()

    (The Robert Day School of Economics and Finance, Claremont McKenna College)

  • Scott M. Gilpatric

    ()

    (Department of Economics, University of Tennessee)

  • Jay P. Shimshack

    ()

    (Frank Batten School of Leadership and Public Policy, University of Virginia)

We explore mechanisms driving enforcement spillovers - when sanctions at one entity influence behavior at other entities. Our model illustrates when spillovers arise from a regulatory channel and when they arise from a channel not emphasized in the existing literature: product markets. Using facility-by-month data from Clean Water Act manufacturers, we find that penalties generate strong positive spillovers for other facilities facing the same authority. We find suggestive evidence that penalties generate negative spillovers for facilities in the same industry but facing a different authority. Results are consistent with spillovers driven by strategic interactions in both regulation and product markets.

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File URL: http://web.utk.edu/~jhollad3/RePEc/2015-08.pdf
File Function: First version, 2015
Download Restriction: no

Paper provided by University of Tennessee, Department of Economics in its series Working Papers with number 2015-08.

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Length: 53 pages
Date of creation: Aug 2015
Handle: RePEc:ten:wpaper:2015-08
Contact details of provider: Postal:
Knoxville - TN 37996

Phone: 865-974-3100
Fax: (865) 974-1766
Web page: http://econ.bus.utk.edu/
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