Rules of Origin (RoO) are critical components of Preferential Trade Agreements (PTAs). They are designed to stop products coming into a PTA through the partner that applies the lowest tariff – a phenomenon known as trade deflection. While RoO are necessary, complex RoO may undo the benefits of trade agreements. Using a novel database of RoO, this paper evaluates the incidence and restrictiveness of different types of Product-Specific Rules of Origin (PSRs) across 128 reciprocal PTAs for the period 1990–2015. Results, based on a structural gravity model controlling for confounding factors, display wide heterogeneity across different categories of PSRs attached to preferential margins, with more flexible PSRs associated with a significantly stronger trade effect compared to more restrictive ones where exporters do not have a choice among PSRs or have to satisfy multiple PSRs. A simulation exercise reveals that a radical simplification reform leading to the adoption of flexible PSRs providing alternative choices to prove origin would have increased global trade under PTAs on average by between 2.7 and 4% during the sample period.

This article compares the U.S. Environmental Protection Agency’s (EPA) ex ante cost analysis of its 1995 Large Municipal Waste Combustor (MWC): New Source Performance Standards and Emissions Guidelines rule to an ex post assessment of its cost. Unlike many retrospective cost analyses, where ex post assessments are limited due to lack of data on compliance costs, this case study is unique because we located and used plant-level survey data from the U.S. Department of Energy and Governmental Advisory Associates in a comparison of ex ante and ex post costs of individual MWCs. We find the ex post capital expenditures for nitrogen oxide control systems are typically lower than the EPA ex ante estimates, while the ex post capital expenditures for mercury control systems tend to be higher than the EPA ex ante estimates. Finally, while we find a few outliers, the average ratio of ex post to ex ante capital expenditures for particulate matter and sulfur dioxide emissions control is near unity.

Developing countries often rely on consumption taxes, because these are broad, easy to administer, and harder to evade. However, the taxation system becomes inherently regressive. To counter this problem of the regressive nature of consumption taxes, there is a temptation among policymakers to address equity concerns through a multiplicity of rates, making the consumption tax system complex. Here, complexity is considered the by-product, or companion, to pursuing goals of equity. Complex tax systems, however, pose a different problem relating to equity. Assuming a minimum fixed cost of compliance imposed by a complex tax system, smaller firms and individuals face a much higher cost of compliance relative to larger firms and richer individuals. Oligarchic sectors dominated by a few large firms also find it easier to organize and lobby to get favorable rates compared to competitive sectors with small firms. Though complexity is considered a by-product of several equity-enhancing measures, the Indian experience with its Goods and Services Tax reform serves demonstrates the opposite, that there is a trade-off between equity and complexity.

Farmers and taxpayers would benefit from more cost-effective agricultural nutrient pollution control measures. The objectives of our study are (1) to assess compliance costs and reductions in phosphorus loadings from implementation of nutrient management and riparian buffers; and (2) to estimate how the spatial scenario, which is the method of representing farms within the watershed, affects estimated compliance costs and reductions in phosphorus deliveries. Estimated compliance costs are quite sensitive to the spatial scenario. Buffers are more cost-effective than nutrient management under one of the two spatial scenarios, whereas nutrient management is more cost-effective under the other scenario. Shifts to more erosive crops reduce the effectiveness of both pollution control measures.

It has occasionally been asserted that regulators typically overestimate the costs of the regulations they impose. A number of arguments have been proposed for why this might be the case. The most widely credited is that regulators fail sufficiently to appreciate the effects of innovation in reducing regulatory compliance costs. Most existing studies have found that regulators are more likely to over- than to underestimate costs. While it is difficult to develop summary statistics to aggregate the results of different studies of disparate industries, one such measure is the average of the ratio of ex ante estimates of compliance costs to ex post estimates of the same costs. This ratio is generally greater than one. In this paper I argue that neither the greater frequency of overestimates nor the fact that the average ratio of ex ante to ex post cost estimates is greater than one necessarily demonstrates that ex ante estimates are biased. There are several reasons to suppose that the distribution of compliance costs could be skewed, so that the median of the distribution would lie below the mean. It is not surprising, then, that most estimates would prove to be too high. Moreover, Jensen’s inequality implies that the expected ratio of ex ante to ex post compliance costs would be greater than one. I propose a regression-based test of the bias of ex ante compliance cost estimates, and cannot reject the hypothesis that estimates are unbiased. Failure to reject a hypothesis with limited and noisy data should not, of course, be interpreted as a strong argument to accept the hypothesis. Rather, this paper argues for the generation of more and better information. Despite the existence of a number of papers reporting ex ante and ex post compliance cost estimates, it is surprisingly difficult to get a large sample with which to make such comparisons.