Averting Regulatory Enforcement: Evidence from New Source Review

41 Pages Posted: 16 Oct 2007 Last revised: 4 Dec 2022

See all articles by Nathaniel O. Keohane

Nathaniel O. Keohane

Yale University - School of Management

Erin T. Mansur

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Andrey Voynov

Yale University - School of Forestry and Environmental Studies

Date Written: October 2007

Abstract

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.

Suggested Citation

Keohane, Nathaniel O. and Mansur, Erin T. and Voynov, Andrey, Averting Regulatory Enforcement: Evidence from New Source Review (October 2007). NBER Working Paper No. w13512, Available at SSRN: https://ssrn.com/abstract=1021990

Nathaniel O. Keohane (Contact Author)

Yale University - School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

Erin T. Mansur

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States
603 646 2398 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Andrey Voynov

Yale University - School of Forestry and Environmental Studies ( email )

New Haven, CT 06511
United States

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