Governments often delegate aspects of regulatory enforcement to third-party firms that sell compliance-related services to regulated buyers. Competition in markets for these services may induce sellers to help buyers evade regulations, but can lower compliance costs for honest buyers. This paper quantifies this tradeoff in the Texas market for passenger vehicle emissions tests. Test-level administrative data show that drivers purchased more than 9 million falsified tests from thousands of competitive firms between 2002 and 2024. More intense competition due to the entry of new firms causes a 6% increase in cheating by nearby incumbents. Cheating allows drivers to forego repairs and vehicle replacement that would avoid $28 - $55 of annual health damages from tailpipe emissions. To understand how much consumers benefit from a dense spatial distribution of differentiated testing firms, I estimate a spatial dynamic discrete choice model of demand for repairs and for cheating and fair tests. A counterfactual market like that in other U.S. states in which a monopolist controls a small number of testing locations would increase the ratio of compliance costs to environmental benefits even if it eliminated cheating. Pigouvian taxes would be more cost effective.

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.