Abstract
I investigate the strategic responses of polluters in the US. Under the Clean Air Act, data from air quality monitors are crucial for determining whether an area meets environmental standards. Since air pollution can be easily carried by wind, these monitors capture more pollution from upwind areas and less from downwind areas. As a result, polluters may be incentivized to emit less on days when they are upwind and more when they are downwind. I identify such strategic behavior among US power plants, finding that a one-standard-deviation increase in favorable wind direction (i.e., when the wind blows pollutants away from monitors) leads to a 0.8% and 0.5% increase in sulfur dioxide (SO₂) and nitrogen dioxide (NOₓ) emissions, respectively. This increase is more pronounced when wind speed is higher. At the same time, fuel input remains unchanged, but the emission rate rises, suggesting that power plants temporarily turn off pollution control equipment. Additionally, the increase is more pronounced when power plants and monitors are in the same state, suggesting that local governments may be more lenient when local polluters' emissions do not negatively impact their monitoring outcomes.