Do Environmental Regulations Disproportionately Affect Small Businesses?

Presenter
Ron Shadbegian, EPA

Abstract

It remains an open question whether the impact of environmental regulations differs by the size of the establishment. Such differences might be expected because of statutory, enforcement, and/or compliance asymmetries. Statutory asymmetries exist when regulations explicitly impose less stringent requirements on certain types of businesses, such as small businesses. Enforcement asymmetries result when regulators choose to target certain establishments over others – a decision that may hinge on establishment or firm size. And compliance asymmetries arise when regulatory compliance involves significant fixed costs. For example, some pollution abatement is quite capital intensive, which would result in higher costs per unit of output for smaller establishments. Here, we consider the net effect of these three asymmetries, by estimating the relation between establishment size and pollution abatement expenditures. In particular, we employ establishment-level data from the U.S. Census Bureau’s Pollution Abatement Costs and Expenditures (PACE) surveys of 1979-1982, 1984-1986, and 1988-1994. To this, we merge data on these establishments from the Annual Survey of Manufactures and Census of Manufactures. We model establishments’ PAOC intensity – that is, their pollution abatement operating costs per unit of economic activity – as a function of establishment size, industry, and year. Our preliminary results show that there is a U-shaped relationship between PAOC intensity and establishment size. In all cases, the very largest establishments (with 1000+ employees) are estimated to have the highest PAOC intensity, while establishments with 50-99 and 100-249 employees tend to have the lowest PAOC intensity.

Date
Thursday, September 1, 2011
12 - 1:30 p.m.

Lunch will be provided

Location
7th Floor Conference Center
1616 P St. NW
Washington, D.C. 20036

All seminars will be in the 7th Floor Conference Room at RFF, 1616 P Street NW. 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 Daniel McDermott at [email protected] (tel. 202-328-5174). Updates to our academic seminars schedule will be posted at www.rff.org/academicseminarseries.