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The Effects of Regulation in the Presence of Multiple Unpriced Externalities: Evidence from the Transportation Sector

Author

Listed:
  • Antonio Bento
  • Daniel Kaffine
  • Kevin Roth
  • Matthew Zaragoza-Watkins

Abstract

In transportation systems with unpriced congestion, allowing single-occupant low-emission vehicles in high-occupancy vehicle (HOV) lanes to encourage their adoption exacerbates congestion costs for carpoolers. The resulting welfare effects of the policy are negative, with environmental benefits overwhelmingly dominated by the increased congestion costs. Exploiting the introduction of the Clean Air Vehicle Stickers policy in California with a regression discontinuity design, our results imply a best-case cost of $124 per ton of reductions in greenhouse gases, $606,000 per ton of nitrogen oxides reduction, and $505,000 per ton of hydrocarbon reduction, exceeding those of other options readily available to policymakers.

Suggested Citation

  • Antonio Bento & Daniel Kaffine & Kevin Roth & Matthew Zaragoza-Watkins, 2014. "The Effects of Regulation in the Presence of Multiple Unpriced Externalities: Evidence from the Transportation Sector," American Economic Journal: Economic Policy, American Economic Association, vol. 6(3), pages 1-29, August.
    • Handle: RePEc:aea:aejpol:v:6:y:2014:i:3:p:1-29
    Note: DOI: 10.1257/pol.6.3.1
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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    1. The Effects of Regulation in the Presence of Multiple Unpriced Externalities: Evidence from the Transportation Sector (American Economic Journal: Economic Policy 2014) in ReplicationWiki

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