This paper provides an empirical investigation of the effect of the European Union's Emissions Trading Scheme on German stock returns. We find that, during the first few years of the scheme, firms that received free carbon emission allowances on average significantly outperformed firms that did...

How to design audit mechanisms that harness the benefits of self-reporting for achieving compliance with regulatory targets while limiting misreporting is a pressing questionin many regulatory contexts, from climate policies to public health. We theoretically and experimentally study the...

Many environmental tax systems rely on self-reported emissions by firms. These emissions reports are verified through costly auditing efforts by regulatory agencies that are constrained in their auditing budgets. The typical finding in the literature is that the agencies allocate the available...

In this online Appendix we explore several modifications to the model in the main paper entitled "A Theory of Social License when Regulatory Pressure is Jointly Produced by an EPA and an NGO" (Journal of Regulatory Economics, forthcoming). Section 1 considers the case in which both regulators,...

We assess the empirical relation between firm gross profitability and reported carbon emission intensity. Using data on S&P 500 firms, we find that the cross-sectional relation between profitability and carbon emission intensity is strongly negative: firms with high carbon emission intensity...