Enforcement of Vintage Differentiated Regulations:The Case of New Source Review

This paper analyzes the eects of the New Source Review (NSR) environmental regula-tions on coal-red electric power plants. Regulations that grew out of the Clean Air Actof 1970 required new electric generating plants to install costly pollution control equipmentbut exempted existing plants. Existing plants lost their exemptions if they made \majormodications." We examine whether this caused rms to invest less in grandfathered plants,possibly leading to lower efficiency and higher emissions. We nd evidence that heightenedNSR enforcement reduced capital expenditures at vulnerable plants. However, we nd nodiscernable eect on other inputs or emissions.[...]