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 Environmental Policy Jay Shimshack Jay Shimshack is 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? Former Head of Belonging and Inclusion at Airbnb Joins Batten Faculty News Melissa Thomas-Hunt is bringing a unique blend of scholarly and real-world expertise to her dual appointment at UVA’s Batten School and Darden School of Business. Batten's New Postdoctoral Researchers to Focus on Diversity, Social Identity News The School's new postdoctoral fellows will investigate perceptions of minorities in academia and the workplace, among other subjects.