Environment Spillovers: Lessons from Strategic Interactions in Regulation and Product Markets August 2017 By Jay ShimshackMary EvansScott Gilpatric Environment Spillovers: Lessons from Strategic Interactions in Regulation and Product Markets We explore enforcement spillovers - when sanctions at one entity influence behavior at other entities. Our model illustrates when spillovers arise from a regulatory channel and when they arise from a channel not previously emphasized: product markets. Our model motivates empirically-refutable hypotheses, which we test using data from Clean Water Act manufacturers. We find that penalties create positive spillovers for other facilities facing the same regulatory authority but generate negative spillovers for facilities in the same industry facing a different authority. This is the first paper to explain and systematically document this ‘enforcement leakage’. Shimshack_EGS_Enforcement_Leakage_August2017.pdf Areas of focus Environment Jay Shimshack Jay Shimshack is Associate Professor of Public Policy and Economics, and the Associate Dean for Academic Affairs at the University of Virginia’s Frank Batten School. He received a Ph.D. from U.C. Berkeley and a B.S. from Cornell University. Prior to joining UVa, Shimshack held positions at Tulane University and Tufts University and a visiting faculty fellowship at the University of Michigan. His major fields are environmental regulation, environmental economics, corporate social behavior, and applied microeconomics for public policy. Read full bio Mary Evans Claremont McKenna College Scott Gilpatric University of Tennessee Related Content Jay Shimshack Costly Sanctions and the Treatment of Frequent Violators in Regulatory Settings Research Regulators typically treat frequent violators more harshly. When does such harsh treatment maximize overall compliance? Disaster Preparedness and Disaster Response: Evidence from Sales of Emergency Supplies Before and After Hurricanes Research Government information warns households to acquire emergency supplies as hurricanes threaten and directs households to stay off roads after hurricanes make landfall. Do households follow this advice? Professor Jay Shimshack Appointed Batten School Associate Dean for Academic Affairs News The Batten School announced the appointment of Professor Jay Shimshack as associate dean for academic affairs. Shimshack succeeds Professor Craig Volden, who will conclude his distinguished four-year term as associate dean at the end of June and transition to the role of interim dean of the Batten School until Dean-elect Ian Solomon’s arrival on Sept. 1. If This Environmentally Conscious Batten Professor Could Fix Just One Thing... News Having skied and sailed in beautiful locales like Jackson, Wyoming; Newport, Rhode Island; and Puerto Rico, Jay Shimshack has loved nature ever since he can remember. So when he turned that love into a career, it felt, well, completely natural.