Discretion and Manipulation by Experts: Evidence from a Vehicle Emissions Policy Change

29 Pages Posted: 8 May 2011 Last revised: 28 Mar 2012

See all articles by Lamar Pierce

Lamar Pierce

Washington University, Saint Louis - John M. Olin School of Business

Jason Snyder

University of California, Los Angeles (UCLA) - Anderson School of Management

Date Written: March 27, 2012

Abstract

Environmental regulation seeks to limit pollution through strict emissions thresholds for existing cars, yet it remains unclear how frequently inspectors enforce these and what impact test manipulation has on policy efficacy. We demonstrate (1) a strong discontinuity in the emissions results distribution, with vehicles expected to barely fail missing from the data; and (2) When the state tightens emissions standards, over 50% of vehicles newly at risk show instantaneous test improvements. These improvements cannot be explained by legitimate repairs and are consistent with facilities exploiting procedural discretion in order to help consumers evade strengthened regulations.

Keywords: Fraud, Corruption, Forensic Economics, Environmental Policy, Moral Hazard, Regulation

Suggested Citation

Pierce, Lamar and Snyder, Jason, Discretion and Manipulation by Experts: Evidence from a Vehicle Emissions Policy Change (March 27, 2012). Available at SSRN: https://ssrn.com/abstract=1831494 or http://dx.doi.org/10.2139/ssrn.1831494

Lamar Pierce (Contact Author)

Washington University, Saint Louis - John M. Olin School of Business ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
314-935-5205 (Phone)

Jason Snyder

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

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