Title

State policy impacts on firm-level simultaneous environmental-economic efficiency

Date of Award

1997

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Public Administration

Advisor(s)

Stuart I. Bretschneider

Keywords

firm behavior

Subject Categories

Business Law, Public Responsibility, and Ethics | Public Administration

Abstract

The objective of this dissertation is to understand the relationship between firm behavior in terms of joint output of economic product and environmental waste, and state environmental policy. There are three main parts of this work. First, based on the theoretical premise that firms attempt to simultaneously satisfy both economic and environmental objectives, a production function for chemical plants in the U.S. is developed in which both economic and environmental outputs are incorporated. Data envelopment analysis (DEA) is then used on panel data constructed from the Census of Manufacturers (United States Bureau of the Census), Pollution Abatement Cost and Expenditure data set (United States Bureau of the Census), and the Toxic Release Inventory (United States Environmental Protection Agency) for the years 1989-1991 to obtain a measure of technical efficiency at the facility level for the joint production function. The measure serves to evaluate the performance of firms in terms of the simultaneous output of both products. The second part of the dissertation develops a theoretical model of state policy environments. The model identifies five main dimensions of state policy: cooperativeness, coerciveness, reactivity, effort and complexity. Attributes of all five dimensions are discussed and hypotheses about how the different dimensions affect firm joint behavior are developed. In the third part of the dissertation, the joint efficiency measure becomes the dependent variable in a tobit analysis. Independent variables that operationalize the attributes of state policy dimensions are described and various models that test the hypotheses developed about state policy affects on facility behavior are evaluated. Findings indicate that increased cooperative behavior by regulators, coercive policies that utilize greater degrees of enforcement, and greater overall environmental policy effort by states, are all positively related to higher joint efficiency levels. Concentration or importance of the chemical industry is negatively associated with higher joint efficiency levels. Reactivity shows no effect. With the exception of the finding about cooperativeness, the results generally reflect what is commonly viewed as a regulatory model. It is suggested that future work focus on the interactions between cooperative and coercive regulation in relation to joint economic and environmental efficiency.

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