Governments often delegate aspects of regulatory enforcement to third-party firms that sell compliance-related services to regulated buyers. Competition in the resulting compliance markets may generate social costs and benefits: it can lead to lower prices and better choices for buyers, but may induce sellers to help buyers evade regulations. This paper quantifies this tradeoff in the market for passenger vehicle emissions tests in Texas. Test-level administrative data shows that thousands of testing firms falsified more than 7 million tests between 2002 and 2024. Quasi-random increases in competition cause more cheating, which allows drivers to avoid repairs that would causally decrease their vehicles' emissions of harmful air pollutants. To understand how much competition benefits consumers and causes externalities in equilibrium, I estimate a supply model of cheating and fair tests and a dynamic discrete choice model of demand for tests among differentiated stations, as well as for repairs. 

Dockless, shared e-bikes and scooters are a rapidly-growing segment of the local transportation market despite being taxed at higher rates per mile of travel than many conventional transportation modes, including motor vehicles. This paper asks what the optimal tax rate for shared bikes and scooters would be when accounting for environmental externalities and redistribution. We derive a sufficient-statistics model that describes how optimal tax rates depend on both extensive-margin (number of trips) and intensive-margin (duration of trips) demand responses to price changes, as well as the income of bike and scooter users and net externalities relative to other travel modes. We estimate the parameters of this model using trip-level data from Lime, a large bike and scooter company, and find that in several U.S. cities, use of their vehicles is concentrated among low-income individuals. The model accordingly suggests that policymakers in these cities might want to subsidize shared bike and scooter use substantially more than what can be justified by the  modest positive externalities it generates by displacing trips by motor vehicles.