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 Disparities in PM2.5 air pollution in the United States Research Particulate air pollution in the contiguous United States has decreased considerably over recent decades, but where exactly has that progress been made? Batten's Jay Shimshack and his co-authors dive in. 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? Faculty Spotlight: From College Drop-Out to Action-Minded, Award-Winning Professor News Batten's Paul Martin teaches a course aimed at improving experiences for first-generation students at UVA, while also participating in a wide range of activities for the betterment of the Charlottesville community. Nationally, Air Pollution Has Fallen in Recent Decades. But Disparities Between Communities Persist. News Air pollution can have serious consequences for a person’s quality of life. Inhaling high concentrations of “fine particulate matter,” or particles approximately 40 times smaller than a grain of sand, has been linked to cancer, heart disease, and even death Jonathan Colmer told an online audience last week.