We investigate the effects of consumers’ environmental concerns and market competition on firms’ decisions to innovate in “clean” technologies. Agents care about their consumption footprint; firms pursue greener products soften price competition. Acting as complements, these forces determine R&D, pollution, welfare. test theory using panel data patents by 7,060 automobile sector 25 countrie...

This paper examines whether an intra-household externality prevents adoption of a technology with substantial implications for population health and the environment: improved cookstoves. Motivated by a model of intra-household decision-making, the experiment markets stoves to husbands or wives in turn at randomly varying prices. We find that women – who bear disproportionate cooking costs – hav...

Taking advantage of the structure of the 1990 Clean Air Act Amendments (CAAA), we study the tradeoff between efficiency and equity associated with different levels of discretionary power when delegating regulatory authority to lower levels of government. Exploiting an instrumental variables approach, we provide evidence that the benefits of the 1990 CAAA were highly localized and accrued dispro...

We investigate the long-run impact of environmental regulations on the intraindustry distribution of firm-level productivity and the resulting aggregate variables. In a general-equilibrium model that accounts for endogenous entry/exit of heterogeneous firms, neither the average productivity of firms nor the mass of firms is independent of the choice of policy instruments (i.e. emissions tax vs....

The impact of environmental stringency on capital flows remains a hotly contested issue. Moreover, existing parametric estimates using counts of new foreign-owned manufacturing plant births provide counter-intuitive results: pollution abatement costs are only found to have an impact in non-pollution-intensive sectors. Applying recently developed nonparametric count data methods, we re-visit thi...

Integrated assessment models lack a microeconomic foundation in modelling environmental damages to the economy. To overcome this, damage coefficients are incorporated in standard microeconomic models. Firms and consumers take both damages and prices as given. Demand, supply, profit and expenditure functions under damage coefficients are derived that allow easy implementation in applied economic...

Designing an emissions trading scheme requires in-depth knowledge about several aspects. This paper attempts to clarify some important design points of the forthcoming emissions trading scheme for aviation under the EU ETS. Five general key points of system design are acknowledged and comparisons are made to previous and current emission trading schemes. Above all, it is argued that initial all...

While pollution reduction remains a common policy priority, no consensus exists on how best to stimulate needed action. This paper compares the effectiveness of relative and absolute performance standards in motivating emissions cleanup by stationary polluters. Using a unique panel characterizing Chilean pollution sources, I examine a natural experiment created by a change in the performance st...

It seems to be a not uncommonly held view that intertemporal banking and borrowing of tradeable permits might tilt the ‘prices vs. quantities’debate towards looking relatively more favorably upon time-flexible quantities. The present paper shows that this view is incorrect for a natural dynamic extension of the original ‘prices vs. quantities’ information structure, which here allows the firms ...

A perceived advantage of cap-and-trade programs over more prescriptive environmental regulation is that enhanced compliance flexibility and cost effectiveness can make more stringent emissions reductions politically feasible. However, increased compliance flexibility can also result in an inequitable distribution of pollution. We investigate these issues in the context of Southern California’s ...