Table of Contents

When Do Firms Go Green? Comparing Price Incentives with Command and Control Regulations in India

Ann E. Harrison, University of Pennsylvania - Management Department, National Bureau of Economic Research (NBER)
Benjamin Hyman, University of Pennsylvania
Leslie A. Martin, University of Melbourne - Department of Economics
Shanthi Nataraj, RAND Corporation

Operational Conditions in Regulatory Benchmarking Models: A Monte Carlo Analysis

Maria Nieswand, German Institute for Economic Research (DIW Berlin)
Stefan Seifert, German Institute for Economic Research (DIW Berlin)

Domestic Politics and the Formation of International Environmental Agreements

Carmen Marchiori, Department of Economics, University of Bath, London School of Economics & Political Science (LSE) - Grantham Research Institute on Climate Change and the Environment
Simon Dietz, London School of Economics - Grantham Research Institute on Climate Change and the Environment and Department of Geography and Environment
Alessandro Tavoni, London School of Economics & Political Science (LSE), Princeton University - Department of Ecology and Evolutionary Biology, Fondazione Eni Enrico Mattei (FEEM)

Border Adjustments for Carbon Emissions: Basic Concepts and Design

Samuel S. Kortum, University of Chicago - Department of Economics, National Bureau of Economic Research (NBER)
David A. Weisbach, University of Chicago - Law School, Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP)


ENVIRONMENTAL ECONOMICS eJOURNAL

"When Do Firms Go Green? Comparing Price Incentives with Command and Control Regulations in India" Free Download
RAND Working Paper Series WR- 1133

ANN E. HARRISON, University of Pennsylvania - Management Department, National Bureau of Economic Research (NBER)
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BENJAMIN HYMAN, University of Pennsylvania
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LESLIE A. MARTIN, University of Melbourne - Department of Economics
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SHANTHI NATARAJ, RAND Corporation
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India has a multitude of environmental regulations but a history of poor enforcement. Between 1996 and 2004, India’s Supreme Court required 17 cities to enact Action Plans to reduce air pollution through a variety of command-and-control (CAC) environmental regulations. We compare the impacts of these regulations with the impact of changes in coal prices on establishment-level pollution abatement, coal consumption, and productivity growth. We find that higher coal prices reduced coal use within establishments, with price elasticities similar to those found in the US. In addition, higher coal prices are associated with lower pollution emissions at the district level. CAC regulations did not affect within-establishment pollution control investment or coal use, but did impact the extensive margin, increasing the share of large establishments investing in pollution control and reducing the entry of new establishments. For reducing SO2 emissions, our results suggest that higher coal prices were more effective in improving environmental outcomes than command and control measures.

"Operational Conditions in Regulatory Benchmarking Models: A Monte Carlo Analysis" Free Download
DIW Berlin Discussion Paper No. 1585

MARIA NIESWAND, German Institute for Economic Research (DIW Berlin)
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STEFAN SEIFERT, German Institute for Economic Research (DIW Berlin)
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Benchmarking methods are widely used in the regulation of firms in network industries working under heterogeneous exogenous environments. In this paper we compare three recently developed estimators, namely conditional DEA (Daraio and Simar, 2005, 2007b), latent class SFA (Orea and Kumbhakar, 2004; Greene, 2005), and the StoNEZD approach (Johnson and Kuosmanen, 2011) by means of Monte Carlo simulation focusing on their ability to identify production frontiers in the presence of environmental factors. Data generation replicates regulatory data from the energy sector in terms of sample size, sample dispersion and distribution, and correlations of variables. Although results show strengths of each of the three estimators in particular settings, latent class SFA perform best in nearly all simulations. Further, results indicate that the accuracy of the estimators is less sensitive against different distributions of environmental factors, their correlations with inputs, and their impact on the production process, but performance of all approaches deteriorates with increasing noise. For regulators this study provides orientation to adopt new benchmarking methods given industry characteristics.

"Domestic Politics and the Formation of International Environmental Agreements" Free Download

CARMEN MARCHIORI, Department of Economics, University of Bath, London School of Economics & Political Science (LSE) - Grantham Research Institute on Climate Change and the Environment
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SIMON DIETZ, London School of Economics - Grantham Research Institute on Climate Change and the Environment and Department of Geography and Environment
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ALESSANDRO TAVONI, London School of Economics & Political Science (LSE), Princeton University - Department of Ecology and Evolutionary Biology, Fondazione Eni Enrico Mattei (FEEM)
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We investigate the effect of domestic politics on international environmental policy by incorporating into a classic stage game of coalition formation the phenomenon of lobbying by special-interest groups. In doing so, we contribute to the theory of international environmental agreements, which has overwhelmingly assumed that governments make decisions based on a single set of public-interest motivations. Our results suggest that lobbying on emissions may affect the size of the stable coalition in counterintuitive ways. In particular, a powerful business lobby may increase the government’s incentives to sign an agreement, by providing it with strong bargaining power with respect to that lobby at the emission stage. This would result in lower total emissions when the number of countries involved is not too large. We also show that things change radically when lobbying bears directly on the membership decisions, suggesting that both the object and timing of lobbying matter for the way in which membership decisions, emissions and welfare are affected.

"Border Adjustments for Carbon Emissions: Basic Concepts and Design" Free Download
Resources for the Future Discussion Paper 16-09

SAMUEL S. KORTUM, University of Chicago - Department of Economics, National Bureau of Economic Research (NBER)
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DAVID A. WEISBACH, University of Chicago - Law School, Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP)
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We consider the economics and the design of border adjustments (BAs) under a carbon tax. BAs are taxes on imports and rebates on exports on the emissions from the production of a good. They are thought to be a method of reducing inefficiencies from a unilateral carbon price, such as shifts in the location of production, known as leakage. After examining the basic economics of BAs, we examine three design issues: which goods BAs should apply to, which emissions from the production of those goods should be taxed, and from and to which countries BAs should apply. We conclude that BAs will impose high administrative costs and need strong welfare justifications.

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This eJournal distributes working and accepted paper abstracts in the full range of subjects that comprise Environmental Economics. Topics include economic causes and consequences of environmental changes; tax and regulatory policies that affect the environment; markets for pollution rights and related issues; government policies toward the environment; valuation of environmental resources, "green accounting" and intergovernmental cooperation in environmental policy.

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Environmental Economics eJournal

DON FULLERTON
Professor, University of Illinois at Urbana-Champaign - Department of Finance, National Bureau of Economic Research (NBER), CESifo (Center for Economic Studies and Ifo Institute)

LAWRENCE H. GOULDER
Shuzo Nishihara Professor of Environmental and Resource Economics, Stanford University - Department of Economics, Research Associate, National Bureau of Economic Research (NBER), University Fellow, Resources for the Future

WILLIAM D. NORDHAUS
Yale University - Department of Economics, National Bureau of Economic Research (NBER)

PAUL R. PORTNEY
University of Arizona - Eller College of Management

ROBERT N. STAVINS
Albert Pratt Professor of Business and Government, Harvard University - Harvard Kennedy School (HKS), University Fellow, Resources for the Future, Research Associate, National Bureau of Economic Research (NBER)

TOM TIETENBERG
Mitchell Family Professor of Economics, Emeritus, Colby College - Department of Economics