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Article Dans Une Revue American Economic Journal: Economic Policy Année : 2021

Who Benefits When Firms Game Corrective Policies?

James M. Sallee
  • Fonction : Auteur

Résumé

Firms sometimes comply with externality-correcting policies by gaming the measure that determines policy. This harms buyers by eroding information, but it benefits them when cost savings are passed through into prices. We develop a model that highlights this tension and use it to analyze gaming of automobile carbon emission ratings in the EU. We document startling increases in gaming using novel data. We then analyze the effects of gaming in calibrated simulations. Over a wide range of parameters, we find that pass through substantially outweighs information distortions; on net, buyers benefit from gaming, even when they are fooled by it.

Dates et versions

hal-03167777 , version 1 (12-03-2021)

Identifiants

Citer

Mathias Reynaert, James M. Sallee. Who Benefits When Firms Game Corrective Policies?. American Economic Journal: Economic Policy, 2021, 13 (1), pp.372-412. ⟨10.1257/pol.20190019⟩. ⟨hal-03167777⟩
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