Monday, March 8, 2010

The Inflated Cost of Regulations

Winston Harrington, Richard Morgenstern, and Peter Nelson of Resources for the Future, a non-partisan environmental economics think tank in Washington, D.C., have just released a new paper (here) expanding on an article they published in 2000, which found that EPA and other regulatory agencies tend to over-estimate the costs of federal regulations. They cite several reasons for this, including difficulties with projecting technological innovations that eventually reduce compliance costs, and the incentives of industries, which are the agencies' primary sources of cost-information, to inflate cost estimates as a strategy for defeating or relaxing regulations.

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