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Environmental regulation, regulatory spillovers and rent-seeking

Author

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  • Juan Pablo González

    (Universidad de Buenos Aires
    CONICET-Universidad de Buenos Aires)

Abstract

How do special interests react to an increase in their regulatory burden? In this paper, I use a shock to the regulatory environment by analyzing state-level enforcement of the Clean Air Act during the fracking boom. First, I show that fracking is associated with an increase in state regulatory activities for non-energy-related industries, generating regulatory spillovers to firms unrelated to fracking. Using the fact that fracking had regulatory spillovers to other industries, I use the presence of fracking as an instrument for environmental regulation for non-energy-related firms. I find that increased environmental enforcement is associated with an increase in state campaign contributions going to Republicans, and particularly to legislative races in competitive districts. These results provide some of the first evidence that changes in the regulatory environment can spur private sector mobilization with the potential to affect broader areas of policy through its electoral consequences.

Suggested Citation

  • Juan Pablo González, 2025. "Environmental regulation, regulatory spillovers and rent-seeking," Public Choice, Springer, vol. 202(1), pages 217-250, January.
    • Handle: RePEc:kap:pubcho:v:202:y:2025:i:1:d:10.1007_s11127-024-01189-7
    DOI: 10.1007/s11127-024-01189-7
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    More about this item

    Keywords

    Environmental regulation; Campaign contributions; Fracking; Rent-seeking;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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