Escalation of scrutiny: The gains from dynamic enforcement of environmental regulations

Wesley Blundell, Gautam Gowrisankaran, Ashley Langer

Research output: Contribution to journalArticlepeer-review

37 Scopus citations


The US Environmental Protection Agency (EPA) uses a dynamic approach to enforcing air pollution regulations, with repeat offenders subject to high fines and designation as high priority violators (HPV). We estimate the value of dynamic enforcement by developing and estimating a dynamic model of a plant and regulator, where plants decide when to invest in pollution abatement technologies. We use a fixed grid approach to estimate random coefficient specifications. Investment, fines, and HPV designation are costly to most plants. Eliminating dynamic enforcement would raise pollution damages by 164 percent with constant fines or raise fines by 519 percent with constant pollution damages.

Original languageEnglish (US)
Pages (from-to)2558-2585
Number of pages28
JournalAmerican Economic Review
Issue number8
StatePublished - Aug 2020

ASJC Scopus subject areas

  • Economics and Econometrics


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