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Clearing the Air? The Effects of Gasoline Content Regulation on Air Quality

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  • Maximilian Auffhammer
  • Ryan Kellogg

Abstract

This paper examines whether US gasoline content regulations, which impose substantial costs on consumers, have successfully reduced ozone pollution. We take advantage of spatial and temporal variation in the regulations' implementation to show that federal gasoline standards, which allow refiners flexibility in choosing a compliance mechanism, did not improve air quality. This outcome occurred because minimizing the cost of compliance does not reduce emissions of those compounds most prone to forming ozone. In California, however, we find that precisely targeted, inflexible regulations requiring the removal of particularly harmful compounds significantly improved air quality. (JEL L51, L71, L78, Q53, Q58)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 101 (2011)
Issue (Month): 6 (October)
Pages: 2687-2722

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Handle: RePEc:aea:aecrev:v:101:y:2011:i:6:p:2687-2722

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  1. Lucas W. Davis, 2008. "The Effect of Driving Restrictions on Air Quality in Mexico City," Journal of Political Economy, University of Chicago Press, vol. 116(1), pages 38-81, 02.
  2. Matthew Neidell, 2009. "Information, Avoidance Behavior, and Health: The Effect of Ozone on Asthma Hospitalizations," Journal of Human Resources, University of Wisconsin Press, vol. 44(2).
  3. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
  4. Erich J. Muehlegger, 2004. "Gasoline Price Spikes and Regional Gasoline Content Regulations - A Structural Approach," Working Papers 0421, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  5. Arellano, M, 1987. "Computing Robust Standard Errors for Within-Groups Estimators," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(4), pages 431-34, November.
  6. Brown, Jennifer & Hastings, Justine & Mansur, Erin T. & Villas-Boas, Sofia B., 2008. "Reformulating competition Gasoline content regulation and wholesale gasoline prices," Journal of Environmental Economics and Management, Elsevier, vol. 55(1), pages 1-19, January.
  7. Kenneth Y. Chay & Michael Greenstone, 1998. "Does Air Quality Matter? Evidence from the Housing Market," NBER Working Papers 6826, National Bureau of Economic Research, Inc.
  8. Curtis Carlson & Dallas Burtraw & Maureen Cropper & Karen L. Palmer, 2000. "Sulfur Dioxide Control by Electric Utilities: What Are the Gains from Trade?," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1292-1326, December.
  9. Michael Greenstone, 2003. "Did the Clean Air Act Cause the Remarkable Decline in Sulfur Dioxide Concentrations?," Working Papers 0407, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  10. Chakravorty, Ujjayant & Nauges, Celine & Thomas, Alban, 2008. "Clean Air regulation and heterogeneity in US gasoline prices," Journal of Environmental Economics and Management, Elsevier, vol. 55(1), pages 106-122, January.
  11. Kenneth Y. Chay & Michael Greenstone, 2003. "Air Quality, Infant Mortality, and the Clean Air Act of 1970," Working Papers 0406, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  12. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-09, January.
  13. Enrico Moretti & Matthew Neidell, 2011. "Pollution, Health, and Avoidance Behavior: Evidence from the Ports of Los Angeles," Journal of Human Resources, University of Wisconsin Press, vol. 46(1), pages 154-175.
  14. Neidell, Matthew J., 2004. "Air pollution, health, and socio-economic status: the effect of outdoor air quality on childhood asthma," Journal of Health Economics, Elsevier, vol. 23(6), pages 1209-1236, November.
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Citations

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Cited by:
  1. Maureen L. Cropper & Yi Jiang & Anna Alberini & Patrick Baur, 2010. "Getting Cars Off the Road: The Cost-Effectiveness of an Episodic Pollution Control Program," NBER Working Papers 15904, National Bureau of Economic Research, Inc.
  2. Huse, Cristian, 2014. "Fast and Furious (and Dirty): How Asymmetric Regulation May Hinder Environmental Policy," MPRA Paper 48909, University Library of Munich, Germany.
  3. Michael L. Anderson, 2013. "Subways, Strikes, and Slowdowns: The Impacts of Public Transit on Traffic Congestion," NBER Working Papers 18757, National Bureau of Economic Research, Inc.
  4. Joshua Graff Zivin & Matthew Neidell, 2012. "The Impact of Pollution on Worker Productivity," American Economic Review, American Economic Association, vol. 102(7), pages 3652-73, December.
  5. Malina, Christiane & Fischer, Frauke, 2012. "The impact of low emission zones on PM10 levels in urban areas in Germany," CAWM Discussion Papers 58, Center of Applied Economic Research Münster (CAWM), University of Münster.
  6. Daniel Ventosa-Santaulària & Carlos Vladimir Rodríguez-Caballero, 2013. "Polynomial Regressions and Nonsense Inference," CREATES Research Papers 2013-40, School of Economics and Management, University of Aarhus.
  7. Maximilian Auffhammer & Anin Aroonruengsawat, 2011. "Simulating the impacts of climate change, prices and population on California’s residential electricity consumption," Climatic Change, Springer, vol. 109(1), pages 191-210, December.
  8. Joshua Graff Zivin & Matthew Neidell, 2013. "Environment, Health, and Human Capital," Journal of Economic Literature, American Economic Association, vol. 51(3), pages 689-730, September.
  9. Wolfram Schlenker & W. Reed Walker, 2011. "Airports, Air Pollution, and Contemporaneous Health," NBER Working Papers 17684, National Bureau of Economic Research, Inc.
  10. Maximilian Auffhammer & Solomon M. Hsiang & Wolfram Schlenker & Adam Sobel, 2013. "Using Weather Data and Climate Model Output in Economic Analyses of Climate Change," NBER Working Papers 19087, National Bureau of Economic Research, Inc.
  11. Mérel, Pierre & Smith, Aaron & Williams, Jeffrey & Wimberger, Emily, 2014. "Cars on crutches: How much abatement do smog check repairs actually provide?," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 371-395.
  12. Lint Barrage & Eric Chyn & Justine Hastings, 2014. "Advertising, Reputation, and Environmental Stewardship: Evidence from the BP Oil Spill," NBER Working Papers 19838, National Bureau of Economic Research, Inc.
  13. repec:mut:wpaper:58 is not listed on IDEAS
  14. Ujjayant Chakravorty & Céline Nauges & Henry Thille, 2012. "Gasoline Content Regulation and Compliance among US Refineries," CESifo Working Paper Series 3978, CESifo Group Munich.
  15. Pogany, Peter, 2013. "Thermodynamic Isolation and the New World Order," MPRA Paper 49924, University Library of Munich, Germany.
  16. Wolff, Hendrik, 2014. "Keep Your Clunker in the Suburb: Low Emission Zones and Adoption of Green Vehicles," IZA Discussion Papers 8180, Institute for the Study of Labor (IZA).
  17. Anderson, Soren T. & Elzinga, Andrew, 2014. "A ban on one is a boon for the other: Strict gasoline content rules and implicit ethanol blending mandates," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 258-273.

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