nep-res New Economics Papers
on Resource Economics
Issue of 2012‒10‒13
eight papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Do Environmental Regulations Disproportionately Affect Small Businesses? Evidence from the Pollution Abatement Costs and Expenditures Survey By Randy A. Becker; Carl Pasurka, Jr.; Ronald J. Shadbegian
  2. Air Pollution Policy in Europe: Quantifying the Interaction with Greenhouse Gases and Climate Change Policies By Johannes Bollen; Corjan Brink (PBL)
  3. Comprehensive Evaluation of Environmental Policy for Water Pollutants Reduction in Jiaxing City, China By Feng Xu; Nan Xiang; Yoshiro Higano
  4. Cross-sectional statistical analysis of regional climate effects: Ricardian analysis and extensions By Chatzopoulos, Thomas; Schmidtner, Eva; Lippert, Christian
  5. How to Fix the Inefficiency of Global Cap and Trade By Peter Cramton; Steven Stoft
  6. A Note on Organizational Design and the Optimal Allocation of Environmental Liability By de, Vries Frans; Franckx, Laurent
  7. Global Climate Games: How Pricing and a Green Fund Foster Cooperation By Peter Cramton; Steven Stoft
  8. Economics and Design of Capacity Markets for the Power Sector By Peter Cramton; Axel Ockenfels

  1. By: Randy A. Becker; Carl Pasurka, Jr.; Ronald J. Shadbegian
    Abstract: It remains an open question whether the impact of environmental regulations differs by the size of the business. Such differences might be expected because of statutory, enforcement, and/or compliance asymmetries. Here, we consider the net effect of these three asymmetries, by estimating the relationship between plant size and pollution abatement expenditures, using establishment-level data on U.S. manufacturers from the Census Bureau’s Pollution Abatement Costs and Expenditures (PACE) surveys of 1974-1982, 1984-1986, 1988-1994, 1999, and 2005, combined with data from the Annual Survey of Manufactures and Census of Manufactures. We model establishments’ PAOC intensity - that is, their pollution abatement operating costs per unit of economic activity - as a function of establishment size, industry, and year. Our results show that PAOC intensity increases with establishment size. We also find that larger firms spend more per unit of output than do smaller firms.
    Keywords: environmental regulation, costs, business size, U.S. manufacturing
    JEL: Q52 L51 L6
    Date: 2012–09
    URL: http://d.repec.org/n?u=RePEc:cen:wpaper:12-25&r=res
  2. By: Johannes Bollen; Corjan Brink (PBL)
    Abstract: <p>This paper (CPB/PBL) uses the computable general equilibrium model WorldScan to analyse interactions between EU’s air pollution and climate change policies.</p><p>Covering the entire world and seven EU countries, WorldScan simulates economic growth in a neo-classical recursive dynamic framework, including emissions and abatement of greenhouse gases (CO<sub>2</sub>, N2O and CH4) and air pollutants (SO2, NOx, NH3 and PM2.5). Abatement includes the possibility of using end-of-pipe control options that remove pollutants without affecting the emissionproducing activity itself. This paper analyses several variants of EU’s air pollution policies for the year 2020. Air pollution policy will depend on end-of-pipe controls for not more than 50%, thus also at least 50% of the required emission reduction will come from changes in the use of energy through efficiency improvements, fuel switching and other structural changes in the economy. Greenhouse gas emissions thereby decrease, which renders climate change policies less costly. Our results show that carbon prices will fall, but not more than 33%, although they could drop to zero when the EU agrees on a more stringent air pollution policy.</p>
    JEL: Q53 Q54 Q42 D58 H21
    Date: 2012–10
    URL: http://d.repec.org/n?u=RePEc:cpb:discus:220&r=res
  3. By: Feng Xu; Nan Xiang; Yoshiro Higano
    Abstract: Recently, various environmental problems have been brought with the rapid economic development in China. Therefore, now it is important to enforce optimal environmental policies in order to achieve economic development as well as environmental improvement. In this study, we selected Jiaxing city as research area for its high water pollution problem combined with speedy economic growth, and we constructed integrated dynamic environmental-social economic system model to establish the optimization simulation. Through scenarios analysis, we can evaluate the efficiency of the environmental policies from the aspects of both environmental preservation and social economic development. This research will provide prediction on social-economic activities, such as production, finance and budget, endogenously in the social economic model, the water pollutants discharged from social economic activities in environmental system model in the region. The simulation results show a great improvement of the trade-off between environment improvement and economic development in Jianxing city, China.
    Date: 2012–10
    URL: http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa12p606&r=res
  4. By: Chatzopoulos, Thomas; Schmidtner, Eva; Lippert, Christian
    Keywords: Environmental Economics and Policy, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy,
    Date: 2012
    URL: http://d.repec.org/n?u=RePEc:ags:gewi12:133855&r=res
  5. By: Peter Cramton (Economics Department, University of Maryland); Steven Stoft
    Abstract: Global cap and trade equalizes the price of emissions and leads to efficient abatement across countries, but sets the abatement level inefficiently low. It is set too low, because the global cap is the sum of individual country targets set on the basis of self-interest. The efficiency of a single price does not overcome the inefficiency of the public-goods problem inherent in global cap and trade. Fortunately, other policies lead to more cooperative and, hence, more efficient outcomes. Replacing the national quantity targets of global cap and trade with a global price target improves outcomes. To improve outcomes further, the price target is combined with a Green Fund. As we demonstrate by example, the Green Fund can induce cooperation between rich countries that want a high global price and poor countries that are more concerned with Green-Fund payments.
    Keywords: global warming, climate change, climate treaty, cap and trade, carbon tax, carbon price, public goods
    JEL: Q54 Q56 Q58 H41 D78
    Date: 2012
    URL: http://d.repec.org/n?u=RePEc:pcc:pccumd:12cshtf&r=res
  6. By: de, Vries Frans; Franckx, Laurent
    Abstract: A multi task principal-agent model is employed to derive optimal environmental liability rules for risk neutral managers under two alternative organizational structures - a functional organization and a product-based organization. For a product-based organization it is shown that efficiency is independent of whether the firm or managers are liable for environmental damages. In a functional organization it is optimal either to hold the firm liable for environmental damages or, equivalently, not to hold the production managers liable for environmental damages. We derive conditions to obtain the first-best solution for a given organizational structure. Finally, the organizational form that induces the highest environmental effort induces the lowest production effort and vice versa. This suggests that production and environmental protection are substitutes rather than c omplements.
    Keywords: organizations; principal-agent; multi-task; vicarious liability; contr acts
    Date: 2012–05
    URL: http://d.repec.org/n?u=RePEc:stl:stledp:2012-09&r=res
  7. By: Peter Cramton (Economics Department, University of Maryland); Steven Stoft
    Abstract: The international game of cap and trade begins when countries choose their quantity targets, which are largely selected according to self interest. The analogous public-goods game, in which countries choose their abatement levels, has an uncooperative outcome. Compared to that, the Nash equilibrium of the cap-and-trade game shows that abatement can increase but that trade provides opportunities for uncooperative behavior. By contrast, a game in which all countries vote for a global quantity target or a global price target can lead to a highly cooperative choice of target. However, the assignment of responsibilities for a global quantity target stymies implementation of a global cap. The global-price-target game largely overcomes this barrier because a uniform global price provides a focal point for cooperation. However low-emission countries apparently prefer a much lower global-price than more prosperous countries unless a Green Fund is implemented. A game that couples such a fund to the global price target can largely overcome this barrier to cooperation. We describe such a game along with its equilibrium outcome, which promises to be inexpensive and cooperative.
    Keywords: global warming, climate change, climate treaty, cap and trade, carbon tax, carbon price, public goods
    JEL: Q54 Q56 Q58 H41 D78
    Date: 2012
    URL: http://d.repec.org/n?u=RePEc:pcc:pccumd:12csgcg&r=res
  8. By: Peter Cramton (Economics Department, University of Maryland); Axel Ockenfels
    Abstract: Capacity markets are a means to assure resource adequacy. The need for a capacity market stems from several market failures the most prominent of which is the absence of a robust demand-side. Limited demand response makes market clearing problematic in times of scarcity. We present the economic motivation for a capacity market, present one specific market design that utilizes the best design features from various resource adequacy approaches analyzed in the literature, and we discuss other instruments to deal with the problems. We then discuss the suitability of the market for Europe and Germany in particular.
    Keywords: Auctions, electricity auctions, capacity auctions, reliability auctions
    JEL: D44
    Date: 2012
    URL: http://d.repec.org/n?u=RePEc:pcc:pccumd:12cocap&r=res

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