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James M. Sallee
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Publisher: Journals Gateway
The Review of Economics and Statistics (2018) 100 (2): 319–336.
Published: 01 May 2018
Abstract
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We study attribute-based regulations, under which regulatory compliance of a firm, product, or individual depends on a secondary attribute that is not the intended target of the regulation. We develop a theoretical model of the welfare consequences of attribute basing, including its distortionary costs and potential benefits. We then quantify these welfare consequences using quasi-experimental evidence from weight-based fuel economy regulations.We use bunching analysis to showthat vehicle weight increased in response to regulation. We also leverage a policy change and develop a new method for analyzing double-notched policies to compare the costs and benefits of a specific attribute-based policy.
Includes: Supplementary data