Assessing the New Regulatory Regime

One of the characteristics of modern American government is an increasing reliance on self-policing approaches by regulatory agencies. That's partly a result of new thinking about effective forms of regulation, and partly due to resource constraints that prevent agencies from engaging in a wide range of enforcement activities in a growing American economy.

But there's been relatively little evaluation of whether the new techniques actually work. Now Michael W. Toffel of Harvard Business School and Jodi L. Short the Georgetown University Law Center have stepped into the breach with a research paper looking at a self-policing program run by the Environmental Protection Agency. Their conclusions:

We find that on average, facilities that committed to self-police experienced a decline in abnormal events resulting in toxic pollution, and that regulators reduced their scrutiny over self-policing facilities. Upon closer examination, we find strong evidence of these effects among facilities with clean past compliance records, but find no such evidence of among facilities with more problematic compliance histories. These findings support the theoretical promise of meaningful self-policing practices and suggest that voluntary disclosure can serve as a reliable signal of future complianceâ€"but only among a subset of facilities.