Jerry Min (Harvard), "Bias Against Mobile Capital: Evidence from U.S. Environmental Enforcement"
Do governments treat foreign investors fairly when enforcing regulations? Politicians may relax enforcement for foreign-owned firms that threaten exit. They may also favor domestic firms. I argue that, when politicians instead value regulatory stringency and are not protectionist, foreign-owned firms can still face discrimination: an information-driven bias by bureaucratic regulators. Bureaucrats enforce regulations under imperfect information about compliance. External ownership—foreign or domestic non-local—may signal unfamiliarity with local regulations and greater violation risk. Regulators therefore target externally owned firms for extra scrutiny, such as inspections, though not harsher penalties. I examine U.S. environmental regulation, where states conduct most enforcement. I link enforcement records to ownership data on 2.4 million plants since 1989. Plants face more scrutiny after being acquired by foreign and domestic out-of-state companies, not by in-state ones. This bias is concentrated in Democratic strongholds, where politicians value regulatory stringency. Penalty decisions show no ownership bias but favor campaign donors. Bureaucrats’ information-driven bias, not protectionism, drives discrimination against foreign investors.
LOCATION:CGIS Knafel room K354 STATUS:CONFIRMED DTSTART:20260915T160000Z DTEND:20260915T180000Z END:VEVENT END:VCALENDAR