NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Averting Regulatory Enforcement: Evidence from New Source Review

Nathaniel Keohane, Erin T. Mansur, Andrey Voynov

NBER Working Paper No. 13512
Issued in October 2007
NBER Program(s):   EEE   IO

This paper explores firms' response to regulatory enforcement. New Source Review, a provision of the Clean Air Act, imposes stringent emissions limitations on significantly modified older power plants. In 1999, the EPA sued owners of 46 plants for NSR violations. We study how electricity companies respond to both the perceived threat of future action, and the action itself. A discrete choice model estimates plants likelihood of being named in lawsuits increases with large historic emissions and investments. On the eve of the lawsuits, emissions at plants with a one standard deviation greater probability of being sued fell approximately ten percent.

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Document Object Identifier (DOI): 10.3386/w13512

Published: Nathaniel O. Keohane & Erin T. Mansur & Andrey Voynov, 2009. "Averting Regulatory Enforcement: Evidence from New Source Review," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 18(1), pages 75-104, 03. citation courtesy of

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