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The effect of firm size on fracking safety

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  • Eyer, Jonathan

Abstract

Large firms are becoming increasingly dominant in the natural gas production industry. At the same time, regulators and environmental groups are concerned about potential environmental damage associated with hydraulic fracturing. However, small firms are protected from the full extent of their damages, while large firms must internalize a greater portion of their social costs. This paper examines the effect of firm size and liability on environmental safety in the context of hydraulic fracturing in Pennsylvania's Marcellus Shale across three dimensions of size. Impacts of firm size on safety are found across legal, regulatory, and brand dimensions of size with the largest effects being driven by changes in regulatory liability. These safety gains are sizable as violation rates would be approximately twice as high if firms at remained at 2008 sizes.

Suggested Citation

  • Eyer, Jonathan, 2018. "The effect of firm size on fracking safety," Resource and Energy Economics, Elsevier, vol. 53(C), pages 101-113.
    • Handle: RePEc:eee:resene:v:53:y:2018:i:c:p:101-113
    DOI: 10.1016/j.reseneeco.2018.02.006
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    Cited by:

    1. Walls, W.D. & Zheng, Xiaoli, 2021. "Environmental regulation and safety outcomes: Evidence from energy pipelines in Canada," Resource and Energy Economics, Elsevier, vol. 64(C).
    2. Michael Redlinger & Ian Lange & Peter Maniloff, 2016. "Interfirm Learning Economies in Drilling and Environmental Safety," Working Papers 2016-10, Colorado School of Mines, Division of Economics and Business.

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