Political Connections and Selective EPA Enforcement
Speaker: Zigan Wang (Hong Kong University)
Date: Mar 11, Monday, 2019
Time: 12 pm - 1 pm
Venue: Room 1200, Pudong Campus
Abstract:
We examine whether the Environmental Protection Agency (EPA) uniformly enforces regulation pertaining to the Clean Air Act (CAA) for politically connected and unconnected firms using a close election setting from 1980-2010. We find no difference in total greenhouse gas emissions or EPA investigations between the two groups. However, politically connected firms are less likely to be involved in EPA enforcement actions, and when prosecuted, they receive smaller penalties, indicating that they benefit from select environmental enforcement. These results are more pronounced for firms connected to politicians capable of influencing regulatory bureaucrats and connected firms that are more important to their supported politicians. Taken together, our results show that campaign contributions can indirectly benefit firms by way of reduced environmental regulatory enforcement and fines.
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