American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Socioeconomic Disparities in Privatized Pollution Remediation: Evidence from Toxic Chemical Spills
American Economic Journal: Applied Economics
(pp. 219–49)
Abstract
Governments often privatize the administration of regulations to third-party specialists paid for by the regulated parties. We study how the resulting conflict of interest can have unintended consequences for the distributional impacts of regulation. In Massachusetts, the party responsible for hazardous waste contamination must hire a licensed contractor to quantify the environmental severity. We find that contractors' evaluations favor their clients, exhibiting substantial score bunching just below thresholds that determine government oversight of the remediation. Client favoritism is more pronounced in socioeconomically disadvantaged neighborhoods and is associated with inferior remediation quality, highlighting a novel channel for inequities in pollution exposure.Citation
Marion, Justin, and Jeremy West. 2024. "Socioeconomic Disparities in Privatized Pollution Remediation: Evidence from Toxic Chemical Spills." American Economic Journal: Applied Economics 16 (3): 219–49. DOI: 10.1257/app.20220295Additional Materials
JEL Classification
- D63 Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- J15 Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
- K32 Environmental, Energy, Health, and Safety Law
- L51 Economics of Regulation
- Q53 Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics