Tuesday 11
Political Economics and voting
Nicolas-Guillaume Martineau
› 11:30 - 12:00 (30min)
› 604
Electoral Incentives and Firm Behavior: Evidence from U.S. Power Plant Pollution Abatement
Matthew Doyle, Corrado Di Maria  1, *@  , Iam Lange, Emiliya Lazarova@
1 : University of East Anglia  (UEA)
* : Corresponding author

Researchers have utilized the fact that many states have term limits (as opposed to being eligible for re-election) for governors to determine how changes in electoral incentives alter state regulatory agency behavior. This paper asks whether these impacts spill over into private sector decision-making. Using data from gubernatorial elections in the U.S., we €find strong evidence
that power plants spend less in water pollution abatement if the governor of the state where the plant is located is a term-limited democrat. We show that this evidence is consistent with compliance cost minimization by power plants reacting to changes in the regulatory enforcement. Finally, we show that the decrease in spending has environmental impacts as it leads to
increased pollution.

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