The Danger of Tightening Standards Without Appropriate Monitoring Effectiveness in a Competitive Market
38 Pages Posted: 10 Feb 2017 Last revised: 25 Feb 2018
Date Written: February 9, 2017
Despite the tightening of emission standards over the last two decades, actual on-road emissions of NOx from diesel vehicles over that period did not decrease. In fact, recent scandals have highlighted the fact that these emissions increased. Based on a 14-year vehicles’ on-road emission dataset, we find that non-compliance across automakers increased significantly as emission standards tightened. Using two sets of regression models, we conclude that both the non-compliance percentage and the non-compliance magnitude among vehicle models increase with stricter emission standards and fiercer competition under the weak on-road monitoring effectiveness that existed during the period under study. We provide some justification for the EU response of temporarily relaxing standards while working to improve monitoring effectiveness. Our results indicate that when competition intensity is strong, regulatory bodies should ensure that any tightening of standards is accompanied by improved monitoring effectiveness if non-compliance rates are to be kept low.
Keywords: Empirical Research, Environmental Operations, Public Policy, Transportation
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