, Volume 31, Issue 1, pp 83-107
Date: 01 Dec 2006

Can consumers enforce environmental regulations? The role of the market in hazardous waste compliance

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We examine the U.S. hazardous waste management industry to assess the role that consumers play in encouraging environmental compliance. We first examine whether environmental performance affects consumer demand and find that noncompliance does decrease demand, at least in the short term. Next we consider whether market characteristics affect compliance behavior. While we do not find evidence that market size affects behavior, local competition does appear to increase compliance. However, as competition becomes less localized, it has a smaller effect. Finally, regardless of the pressures exerted by consumers to comply, commercial managers are less likely to be in compliance than on-site managers.

For example, President Bush’s 2006 budget request for EPA significantly cut funding to the states who are responsible for over 95% of environmental inspections (ECOS, 2005). At the federal level, the number of positions for compliance monitoring decreased by over 17% from FY 2001 to FY 2003 (U.S. GAO, 2002).