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Identifying the regulator’s objective: Does political support matter?

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  • Zach Raff

    (University of Wisconsin-Stout)

Abstract

This paper relies on an incidence of environmental disaster to examine the specific objective of a regulatory agency. Leveraging the Tennessee Valley Authority’s Kingston Fossil Plant coal ash spill of 2008 as a natural experiment, I compare the public interest theory of regulation—maximization of net social benefits—with public choice theory, which here is the maximization of net political support. I estimate the effect of the environmental disaster on Clean Water Act monitoring in Tennessee to test one posited objective against the other. I find that regulated facilities proximate to the spill are subject to closer state-administered monitoring after the spill than regulated facilities away from the spill, even though the additional wastewater inspections do not produce positive marginal benefits for controlling coal ash. Additionally, the difference in monitoring soon normalizes to pre-spill levels, consistent with the public’s interest in the event. The empirical results supply evidence that the studied regulatory agency maximizes net political support.

Suggested Citation

  • Zach Raff, 2023. "Identifying the regulator’s objective: Does political support matter?," Public Choice, Springer, vol. 194(3), pages 277-295, March.
    • Handle: RePEc:kap:pubcho:v:194:y:2023:i:3:d:10.1007_s11127-022-01032-x
    DOI: 10.1007/s11127-022-01032-x
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    Cited by:

    1. Raff, Zach & Earnhart, Dietrich, 2024. "Environmental monitoring and enforcement at animal feeding operations: The effects on surface water quality," 2024 Annual Meeting, July 28-30, New Orleans, LA 343659, Agricultural and Applied Economics Association.

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    More about this item

    Keywords

    Environmental disaster; Environmental enforcement; National Pollutant Discharge Elimination System; Political economy; Public choice; Public interest; Regulator objective; Welfare;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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