The coefficient on lagged perceived risk is positive and less than one, so that perceived risk does not explode. Finally, the media coefficient is positive. Media coverage increases perceived risk. The theoretical model shows that stigma can be caused by both path dependence and uncertainty, rather than uncertainty alone, which is the accepted explanation in the environmental economics literature. The theoretical model also shows that stigma is not the only outcome after contamination.
Recovery is also possible.
In our examination of Dallas County, Texas, and the RSR lead smelter site, we found that stigma exists close to the site, but it dissipates rapidly with distance. Before the identification of the site by the EPA, there was already a discount for a buying a house with a smelter location. During the period of smelter identification and cleanup, there was a period of high media coverage, and the discount increased. In the first four years after a court ruled that cleanup was complete, no houses were sold within one mile of the site. Finally, in the subsequent five years, houses were sold within one mile of the site but a discount remained.