"Polluters' Profits": An Empirical Note

In describing the possible conditions for profit enhancement caused when environmental regulations are imposed on a given industry, Buchanan and Tullock (B-T) predict higher industry price, lower output, and, because of the lack of competitive entry, inefficient production. An empirical search for t...

Full description

Saved in:
Bibliographic Details
Published in:The Journal of industrial economics 1984-03, Vol.32 (3), p.359-366
Main Author: Yandle, Bruce
Format: Article
Language:English
Subjects:
Capital investments
Environment
Expenditures
Food industries
Industrial economics
Industrial effluents
Industrial growth
Industrial machinery
Industrial regulation
Industry analysis
Pollution control
Profits
Regression analysis
Regulation
Steel industry
Studies
Water pollution
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:In describing the possible conditions for profit enhancement caused when environmental regulations are imposed on a given industry, Buchanan and Tullock (B-T) predict higher industry price, lower output, and, because of the lack of competitive entry, inefficient production. An empirical search for these B-T effects involves a 3-step test procedure in which: 1. Relative capital investment (a proxy for entry) for 11 industries is related to profits and pollution control expenditures. 2. Each industry is examined relative to its own time path, and it is determined how that industry's expansion reacted to a period of environmental regulation. 3. Relative growth in profits is examined. The 11 industries are 2-digit SIC code industries reported by the Department of Commerce for each year, 1973-1980. No industry survived all tests. The food industries almost survived the tests, though, and the nonelectrical machinery and petroleum industries ran very close in the search for polluters profits.
ISSN:0022-1821
1467-6451
DOI:10.2307/2098023