Rules Versus Discretion in Environmental Regulation: Experimental Evidence from Inspections of Pollution Plants
RFF Academic Seminar
In many regulatory and bureaucratic settings there is a tension between setting strict rules to reduce corruption and allowing discretion to draw on local information. This paper reports on a field experiment in the Indian state of Gujarat that increased the frequency of government inspection for a random set of industrial plants. We find that plants inspected more frequently are caught in violation of official pollution standards more often and are threatened with legal action and closure more often. In response, treatment plants modestly improve compliance but do not increase abatement expenditures or reduce pollution by a statistically significant amount. We argue that these modest effects are due to the average randomly inspected plant not being very polluting in the eyes of the regulator, who mainly targets the dirtiest plants. In ongoing work, we model the dynamic interaction between regulators and plants in order to recover comprehensive estimates of the costs of regulation. We use these costs to value the difference between inspecting an average plant versus inspecting one of the dirtier plants that the regulator targets.
Wednesday, October 16, 2013
9:30 - 11:00 a.m.
A light breakfast will be provided.
7th Floor Conference Room
1616 P St. NW
Washington, DC 20036
All seminars will be in the 7th Floor Conference Room at RFF, 1616 P Street NW unless otherwise noted. Attendance is open, but involves pre-registration no later than two days prior to the event. For questions and to register to an event, please contact Karen Furman at firstname.lastname@example.org
. Updates to our academic seminars schedule will be posted at www.rff.org/academicseminarseries.