nep-res New Economics Papers
on Resource Economics
Issue of 2013‒02‒08
four papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Carbon Taxes, Path Dependency and Directed Technical Change: Evidence from the Auto Industry By Philippe Aghion; Antoine Dechezleprêtre; David Hemous; Ralf Martin; John Van Reenen
  2. Incentives and Outcomes: China’s Environmental Policy By Jing Wu; Yongheng Deng; Jun Huang; Randall Morck; Bernard Yeung
  3. The Intergenerational Transfer of Solar Radiation Management Capabilities and Atmospheric Carbon Stocks By Goeschl, Timo; Heyen, Daniel; Moreno-Cruz, Juan
  4. Understanding Public Support for Externality-Correcting Taxes and Subsidies: A Lab Experiment By David Heres; Steffen Kallbekken; Ibon Galarraga

  1. By: Philippe Aghion (Harvard University); Antoine Dechezleprêtre (Grantham Research Institute on Climate Change and the Environment and Centre for Economic Performance, London School of Economics); David Hemous (INSEAD); Ralf Martin (Imperial College Business School and Centre for Economic Performance, London School of Economics); John Van Reenen (Centre for Economic Performance, London School of Economics and NBER)
    Abstract: Can directed technical change be used to combat climate change? We construct new firm-level panel data on auto industry innovation distinguishing between “dirty” (internal combustion engine) and “clean” (e.g. electric and hybrid) patents across 80 countries over several decades. We show that firms tend to innovate relatively more in clean technologies when they face higher tax-inclusive fuel prices. Furthermore, there is path dependence in the type of innovation both from aggregate spillovers and from the firm's own innovation history. Using our model we simulate the increases in carbon taxes needed to allow clean to overtake dirty technologies.
    Keywords: Climate Change, Innovation, Directed Technical Change, Automobiles
    Date: 2012–12
  2. By: Jing Wu; Yongheng Deng; Jun Huang; Randall Morck; Bernard Yeung
    Abstract: In generating fast economic growth, China is also generating growing concern about its environmental record. Using 2000-2009 data, we find that, while spending on environmental infrastructure has visible positive environmental impact, city spending is strongly tilted towards transportation infrastructure. Investment in transportation infrastructure correlates strongly with both real GDP growth, a measure of tangible economic growth relevant to city-level Party and government cadres’ promotion odds, and with land prices, which affect city governments’ revenues from land lease sales. In contrast, city governments’ spending on environmental improvements is at best uncorrelated with cadres’ promotion odds, and is uncorrelated with local GDP growth and land prices. These findings suggest that, were environmental quality explicitly linked to a cadre’s chance of promotion, or were environmental quality to affect land prices substantially, city-level public investment in environmental improvement would rise.
    JEL: G0 H54 P2 P26 Q56 Q58 R11
    Date: 2013–02
  3. By: Goeschl, Timo; Heyen, Daniel; Moreno-Cruz, Juan
    Abstract: Solar radiation management (SRM) technologies are considered one of the likeliest forms of geoengineering. If developed, a future generation could deploy them to limit the damages caused by the atmospheric carbon stock inherited from the current generation, despite their negative side effects. Should the current generation develop these geoengi-neering capabilities for a future generation? And how would a decision to develop SRM impact on the current generation's abatement efforts? Natural scientists, ethicists, and other scholars argue that future generations could be more sanguine about the side effects of SRM deployment than the current generation. In this paper, we add economic rigor to this important debate on the intergenerational transfer of technological capabilities and pollution stocks. We identify three conjectures that constitute potentially rational courses of action for current society, including a ban on the development of SRM. How-ever, the same premises that underpin these conjectures also allow for a novel possibility: If the development of SRM capabilities is sufficiently cheap, the current generation may for reasons of intergenerational strategy decide not just to develop SRM technologies, but also to abate more than in the absence of SRM.
    Keywords: Geoengineering; Climate Change; Intergenerational Issues; Strategic Behavior.
    Date: 2013–01–24
  4. By: David Heres; Steffen Kallbekken; Ibon Galarraga
    Abstract: The potential of taxation to correcting environmental externalities has been long recognized among economists. Yet, this welfare-enhancing policy commonly faces strong opposition by citizens. Conversely, externality-correcting subsidies frequently enjoy high levels of public acceptance. We conduct a lab experiment to explore public support for Pigouvian taxes and subsidies. In an experimental market with a negative externality, participants vote on the introduction of Pigouvian taxes and subsidies under full or partial information concerning how the tax revenues will be spent and the subsidy paid for. Theoretically the two instruments should produce identical outcomes. We find substantially greater support for subsidies than taxes. This can partially be explained by the expectation that the subsidy will increase payoffs more than a tax, but not because it could be more effective in changing behavior. Furthermore, we find that under partial information, the preference for subsidies is even stronger.
    Keywords: Pigouvian taxes; subsidies; lab experiment; public policy; revenues; effectiveness
    Date: 2013–01

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