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Self-Policing Statutes: Do They Reduce Pollution and Save Regulatory Costs?

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  • Santiago Guerrero
  • Robert Innes

Abstract

State-level statutes provide firms that engage in environmental self-audits, and that self-report their environmental violations, a variety of regulatory rewards, including "immunity" from penalties and "privilege" for information contained in self-audits. This article studies a panel of state-level industries from 1989 through 2003, to determine the effects of the different types of statutes on toxic pollution and government inspections. We find that, by encouraging self-auditing, privilege protections tend to reduce pollution and government enforcement activity; however, sweeping immunity protections, by reducing firms' pollution prevention incentives, raise toxic pollution and government inspection oversight. The Author 2011. Published by Oxford University Press on behalf of Yale University. All rights reserved. For Permissions, please email: journals.permissions@oup.com, Oxford University Press.

Suggested Citation

  • Santiago Guerrero & Robert Innes, 2013. "Self-Policing Statutes: Do They Reduce Pollution and Save Regulatory Costs?," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 29(3), pages 608-637, June.
    • Handle: RePEc:oup:jleorg:v:29:y:2013:i:3:p:608-637
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    File URL: http://hdl.handle.net/10.1093/jleo/ewr012
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    Cited by:

    1. Carrión-Flores, Carmen E. & Innes, Robert & Sam, Abdoul G., 2013. "Do voluntary pollution reduction programs (VPRs) spur or deter environmental innovation? Evidence from 33/50," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 444-459.
    2. Robert Innes, 2017. "Lie aversion and self-reporting in optimal law enforcement," Journal of Regulatory Economics, Springer, vol. 52(2), pages 107-131, October.
    3. Gupta, Sonam & Innes, Robert, 2014. "Private politics and environmental management," Journal of Environmental Economics and Management, Elsevier, vol. 68(2), pages 319-339.
    4. Thomas P. Lyon & John W. Maxwell, 2014. "Self-Regulation and Regulatory Flexibility: Why Firms May be Reluctant to Signal Green," Working Papers 2014-11, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.

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