Browsing by Author "Skorin Uranga, Pedro Pablo"

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    Delegating environmental enforcement to private agents: The case of smog checks
    (2024) Skorin Uranga, Pedro Pablo; Montero Ayala, Juan Pablo; Gallego Yáñez, Francisco; Pontificia Universidad Católica de Chile. Instituto de Economía
    Delegating the enforcement of environmental norms to private agents has costs and benefits. Even if private agents do not compete, they may exercise lower than socially optimal enforcement efforts. This problem is exacerbated when they compete. We explore these questions using data from Chile’s smog (and safety) checks on passenger vehicles. We find strong reduced-form evidence that competition has prompted smog-check providers to relax their enforcement standards, approving cars that did not comply with the norms. This has increased pollution. On the other hand, competition has also shown to improve service quality, reducing inspection times. By looking at government-made changes to the level of competition in different locations, we also show that firms learn how to distort their pass rates and carry this learning across unrelated markets.