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When and Why do Plants Comply? Paper Mills in the 1980s*


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    Financial support for the research from the National Science Foundation (grant # SBR-9809204) and the Environmental Protection Agency (grants #R-826155-01-0 and #R-828824-01-0) is gratefully acknowledged, as is access to Census data at the Boston Research Data Center. Valuable comments were received from Alex Pfaff, Suzi Kerr, Amanda Lee, and Maureen Cropper, as well as seminar participants in the AERE Summer Workshop, the NBER Summer Institute, Lehigh University, Center for Economic Studies, the University of California, Berkeley, and a 2003 AERE-ASSA session. We are grateful to the many people in the paper industry who were willing to share their knowledge of the industry with us. Capable research assistance was provided by Bansari Saha, Aleksandra Simic, Nadezhda Baryshnikova, and Melanie Lajoie. The opinions and conclusions expressed are those of the authors and not the Census Bureau, EPA, or NSF. All papers using Census data are screened to ensure that they do not disclose confidential information. Any remaining errors or omissions are those of the authors.

Address correspondence to Wayne Gray, Clark University, Economics Department, 950 Main Street, Worcester, MA 01610, USA; telephone: (508) 793-7693; e-mail:


This paper uses census data for 116 pulp and paper mills over the period 1979–1990 to examine the determinants of compliance with air pollution regulations. Several plant characteristics are significant: large plants, old plants, and pulp mills comply less frequently, as do plants with water pollution or OSHA violations, but firm characteristics generally are not significant. Enforcement activity increases compliance, but in a heterogeneous way: pulp mills are less sensitive to inspections, while plants owned by larger firms are less sensitive to inspections and more sensitive to “other” enforcement actions, consistent with the authors’ expectations and prior research results.