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Effects of Size‐Based Environmental Regulations: Evidence of Regulatory Avoidance
Author(s) -
Sneeringer Stacy,
Key Nigel
Publication year - 2011
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1093/ajae/aar040
Subject(s) - regression discontinuity design , exploit , unintended consequences , legislature , scale (ratio) , order (exchange) , business , environmental regulation , public economics , econometrics , economics , computer science , statistics , computer security , geography , mathematics , finance , political science , archaeology , cartography , law
United States environmental regulations often vary by operation size, with larger facilities facing more regulatory stringency. However, such legislative structure may have unintended consequences if operations downsize, slow their growth, or enter at a smaller scale in order to avoid regulation. In this study we use a regression‐discontinuity framework and exploit the size threshold of federal and state rules targeting large‐scale livestock operations to examine whether facilities adjust size to avoid regulation. We find statistical evidence of avoidance, primarily by operations entering at sizes just below the threshold.