PT  - JOURNAL ARTICLE
AU  - Dietrich Earnhart
AU  - Sarah Jacobson
AU  - Yusuke Kuwayama
AU  - Richard T. Woodward
TI  - Discretionary Exemptions from Environmental Regulation
AID  - 10.3368/le.052520-0071R1
DP  - 2023 May 01
TA  - Land Economics
PG  - 203--221
VI  - 99
IP  - 2
4099  - http://le.uwpress.org/content/99/2/203.short
4100  - http://le.uwpress.org/content/99/2/203.full
SO  - Land Econ2023 May 01; 99
AB  - Many environmental regulations impose limits on harmful activities but include discretionary “safety valve” provisions allowing the regulator to grant exemptions that provide relief to regulated parties. We construct a theoretical model and explore cases in which this discretion serves good or ill. We show that when a regulation is otherwise inflexible, exemptions can improve social welfare, and perhaps reduce pollution, by distributing abatement more cost-effectively across polluters. However, these beneficial predictions rely on an unconstrained, fully informed, and benevolent regulator. In other cases, exemptions may not offer such gains; further, the discretionary nature of exemptions allows them to be abused.