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A fine is more than a price: Evidence from drought restrictions

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  • Pratt, Bryan

Abstract

This study evaluates whether financial penalties have non-price effects separate from any punishment avoidance behavior. I investigate the effects of a restriction termed ‘mandatory rationing’ on residential water consumers who face differential exposure to the content of the policy. I find a significant response among households who were likely to be fined, but also among households with low likelihood of facing penalties. I provide evidence that this occurs because the policy directly affected consumption through non-price channels. My findings show that fine-based policies can have impacts beyond the targeted population as a result.

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  • Pratt, Bryan, 2023. "A fine is more than a price: Evidence from drought restrictions," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    • Handle: RePEc:eee:jeeman:v:119:y:2023:i:c:s009506962300027x
    DOI: 10.1016/j.jeem.2023.102809
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    More about this item

    Keywords

    Water; Public policy; Fines; Conservation; Social pressure; Non-price mechanisms; Spatial spillovers;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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