Strategic behaviors toward environmental regulation: A case of trucking industry

Abstract

We used trucking industry's response to the U.S. Environmental Protection Agency's acceleration of 2004 diesel emissions standards as a case study to examine the importance of accounting for regulatees' strategic behaviors in drafting of environmental regulations. Our analysis of the time series data of aggregate U.S. and anada heavy-duty truck production data from 1992 through 2003 found that heavy-duty trucks production increased by 20%-23% in the 6 mo prior to the date of compliance. The increases might be due to truck operators pre-buying trucks with less expensive but noncompliant engines and behaving strategically in anticipation of other uncertainties. (JEL L51, Q25) © 2006 Western Economic Association International.