nep-res New Economics Papers
on Resource Economics
Issue of 2023‒03‒13
five papers chosen by

  1. Can Pollution Markets Work in Developing Countries? Experimental Evidence from India By Greenstone, Michael; Rohini Pande; Sudarshan, Anant; Ryan, Nicholas
  2. The Economic Consequences of Effective Carbon Taxes By Felix Kapfhammer
  3. Shop Until You Drop: the Unexpected Effects of Anticonsumerism and Environmentalism By Giovanni Maccarrone; Marco A. Marini; Ornella Tarola
  4. Trade Policy Uncertainty, Offshoring, and the Environment: Evidence from US Manufacturing Establishments By Choi, Jaerim; Hyun, Jay; Kim, Gueyon; Park, Ziho
  5. The economic benefits of early green innovation: Evidence from the automotive sector By Alberto Agnelli; Hélia Costa; Damien Dussaux

  1. By: Greenstone, Michael (Energy Policy Institute and Department of Economics, University of Chicago.); Rohini Pande (Department of Economics, Yale University); Sudarshan, Anant (University of Warwick); Ryan, Nicholas (Department of Economics, Yale University)
    Abstract: Market-based environmental regulations are seldom used in developing countries, where pollution is the highest but state capacity is often low. We experimentally evaluate a new particulate matter emissions the first in the world, covering industrial plants in a large Indian city. There are three main findings. First, the market functioned well: permit trade was active and plants obtained permits to meet their compliance obligations almost perfectly. Second, treatment plants, randomly assigned to the emissions market, reduced pollution emissions by 20% to 30%, relative to control plants. Third, the market, holding emissions constant, reduces abatement costs by 11% to 14%. These cost estimates are based on a model that estimates heterogeneous plant marginal abatement costs from plant bids for emissions permits. More broadly, we find that emissions can be reduced at small increases in abatement costs. The pollution market therefore has health benefits that exceed costs by at least twenty-five times.
    Date: 2023
  2. By: Felix Kapfhammer
    Abstract: This paper studies the economic consequences of carbon taxes at the macroeconomic and sectoral level. I propose a novel monthly measure of effective carbon tax rates, which, in contrast to the measures used by the existing literature, accounts for the time-varying emission coverage of taxes that are both explicitly and implicitly levied on greenhouse gas-emitting goods. Employing the new measure for four Nordic countries, I find that effective carbon taxes reduce emissions as expected but also decrease macroeconomic and sectoral activity - though there is some heterogeneity in the effects within and across the Nordic countries.
    Date: 2023–01
  3. By: Giovanni Maccarrone (Department of Social and Economic Sciences, Sapienza Università di Roma); Marco A. Marini (Department of Social and Economic Sciences, Sapienza Università di Roma); Ornella Tarola (Department of Social and Economic Sciences, Sapienza Università di Roma)
    Abstract: In an economy where consumers are heterogeneous in their preferences over the hedonic and environmental attributes of goods on sale, we explore the effects of anti-consumerism and environmentalism. We show that when the environmental attributes of products come at the expense of the hedonic attributes, a higher supply of anti-consumerism and environmentalism yields the expected positive effect on the environment. In contrast, when hedonic and environmental attributes are jointly met by a good, higher levels of anti-consumerism and environmentalism negatively affect the society’s environmental footprint. Moreover, the impact of anti-consumerism and environmentalism on social welfare is far from being obvious, giving rise to unexpected redistributive effects between firms and consumers.
    Keywords: Environmentalism, Hedonism, Anti-consumerism, Hedonic and environmental product attributes, Vertical product differentiation
    JEL: D11 L13 Q50
    Date: 2023–02
  4. By: Choi, Jaerim (University of Hawaii at Manoa); Hyun, Jay (HEC Montreal); Kim, Gueyon (University of California, Santa Cruz); Park, Ziho (National Taiwan University)
    Abstract: We study long-run environmental impacts of trade liberalization on US manufacturing by exploiting a plausibly exogenous reduction in US trade policy uncertainty: the conferral of Permanent Normal Trade Relations (PNTR) to China. Using detailed data on establishment-level pollution emissions and business characteristics - including trade activities and global subsidiary information - from 1997 to 2017, we show that establishments reduce toxic emissions in response to a reduction in trade policy uncertainty. Emission abatement is mainly driven by a decline in pollution emission intensity, and not by establishment exits or a reduction in production scale. Emission reduction is more pronounced for (i) establishments with foreign sourcing networks and (ii) those under more stringent environmental regulations. We provide further evidence that supports the pollution haven hypothesis whereby offshoring is central to the mechanism - US manufacturers begin to source from abroad and establish more subsidiaries in China after PNTR, especially those that emit pollutants heavily.
    Keywords: pollution haven hypothesis, toxics release inventory, pollution emissions, trade and environment, trade policy uncertainty, offshoring, particulate matter, PNTR
    JEL: Q53 Q56 F14 F18 F23
    Date: 2023–02
  5. By: Alberto Agnelli; Hélia Costa; Damien Dussaux
    Abstract: The economic consequences for firms investing in green innovation, and therefore their incentives to innovate, are not well understood. This paper empirically assesses the economic returns on innovation in cleaner vehicles. The analysis uses data on passenger car market shares and patents for car manufacturers operating in eight countries for the period 2005-2021. The results show that, when vehicle fuel prices increase, firms having previously successfully filed patents related to both electric and hybrid vehicles and fuel efficiency experience an increase in their market share. This increase takes place between 7 and 8 years after the patent stock is accumulated for patents related to electric and hybrid vehicles and between 8 and 15 years for patents related to fuel efficiency. The analysis also finds that in contexts where fuel price salience is high, price increases generate larger and earlier competitiveness returns for firms having previously invested in cleaner technologies.
    Keywords: firm performance, fuel prices, fuel taxation, green technology, price salience, technological change
    JEL: O30 Q55 Q48
    Date: 2023–02–22

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