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a regulatory battle. Environmental regulations can help<br />
businesses by protecting them from competition. 13 Larger<br />
businesses, the profit-seeking “bootleggers,” can easily<br />
absorb the high costs of regulation, but smaller firms<br />
cannot cope with these costs and cannot enter the market<br />
or are forced to leave it. 14 Environmental activists and<br />
regulators, the moralizing “Baptists,” want regulations to<br />
be passed to improve the environment and expand their<br />
spheres of influence. In this way, the “Baptists” provide<br />
moral cover for many environmental regulations that benefit<br />
special interests, and this cover disguises cronyism as<br />
furthering the public interest.<br />
Instances of cronyism stemming from environmental<br />
regulations abound. A regulation that mandated industrial<br />
scrubber requirements benefited the high-sulfur<br />
eastern US coal industry at the expense of the cleanerburning<br />
western coal industry. 15 Regulators designed the<br />
Clean Air Act of 1970 to benefit established firms at the<br />
expense of newcomers by compelling only new firms to<br />
install expensive scrubbers at coal-fired electric plants<br />
and exempting established firms from this obligation. 16<br />
A 1973 Supreme Court decision further tilted the playing<br />
field in favor of established firms by making the construction<br />
of new smelting plants more difficult for new<br />
competitors.<br />
Economists Michael Maloney and Robert McCormick<br />
empirically tested the effect of the strengthened Clean<br />
Air Act and found that the tougher regulations benefited<br />
existing firms that saw their stock prices increase immediately<br />
following the ruling. 17 The same study analyzed<br />
the effects of a Department of Labor regulation on cottondust<br />
levels in textile factories and found that the stock<br />
ENVIRONMENTALISM 71