TY - JOUR T1 - Discretionary Exemptions from Environmental Regulation JF - Land Economics JO - Land Econ SP - 203 LP - 221 DO - 10.3368/le.052520-0071R1 VL - 99 IS - 2 AU - Dietrich Earnhart AU - Sarah Jacobson AU - Yusuke Kuwayama AU - Richard T. Woodward Y1 - 2023/05/01 UR - http://le.uwpress.org/content/99/2/203.abstract N2 - 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. ER -