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Sacred Cars? Cost-Effective Regulation of Stationary and Nonstationary Pollution Sources

Author

Listed:
  • Meredith Fowlie
  • Christopher R. Knittel
  • Catherine Wolfram

Abstract

For political and practical reasons, environmental regulations sometimes treat point-source polluters, such as power plants, differently from mobile-source polluters, such as vehicles. This paper measures the extent of this regulatory asymmetry in the case of nitrogen oxides (NO x ), the most recalcitrant criteria air pollutant in the United States. We find significant differences in marginal abatement costs across source types: the marginal cost of reducing NO x from cars is less than half the marginal cost of reducing NO x from power plants. Our results measure the possible efficiency gains and distributional implications associated with increasing the sectoral scope of environmental regulations.(JEL Q53, Q58, R41)

Suggested Citation

  • Meredith Fowlie & Christopher R. Knittel & Catherine Wolfram, 2012. "Sacred Cars? Cost-Effective Regulation of Stationary and Nonstationary Pollution Sources," American Economic Journal: Economic Policy, American Economic Association, vol. 4(1), pages 98-126, February.
  • Handle: RePEc:aea:aejpol:v:4:y:2012:i:1:p:98-126
    Note: DOI: 10.1257/pol.4.1.98
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    References listed on IDEAS

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    1. 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.
    2. McCarthy, Patrick S, 1996. "Market Price and Income Elasticities of New Vehicles Demand," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 543-547, August.
    3. Joseph E. Aldy & William A. Pizer, 2009. "Issues in Designing U.S. Climate Change Policy," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 179-210.
    4. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    5. Robert N. Stavins, 1998. "What Can We Learn from the Grand Policy Experiment? Lessons from SO2 Allowance Trading," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 69-88, Summer.
    6. Kenneth Y. Chay & Michael Greenstone, 2003. "The Impact of Air Pollution on Infant Mortality: Evidence from Geographic Variation in Pollution Shocks Induced by a Recession," The Quarterly Journal of Economics, Oxford University Press, vol. 118(3), pages 1121-1167.
    7. Nicholas Z. Muller & Robert Mendelsohn, 2009. "Efficient Pollution Regulation: Getting the Prices Right," American Economic Review, American Economic Association, vol. 99(5), pages 1714-1739, December.
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    Citations

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    Cited by:

    1. Gabriel E. Lade & Ivan Rudik, 2017. "Costs of Inefficient Regulation: Evidence from the Bakken," NBER Working Papers 24139, National Bureau of Economic Research, Inc.
    2. William A. Pizer & Steven Sexton, 2017. "Distributional Impacts of Energy Taxes," NBER Working Papers 23318, National Bureau of Economic Research, Inc.
    3. Luechinger, Simon & Roth, Florian, 2016. "Effects of a mileage tax for trucks," Journal of Urban Economics, Elsevier, vol. 92(C), pages 1-15.
    4. Thomas, Brinda A. & Azevedo, InĂªs L., 2014. "Should policy-makers allocate funding to vehicle electrification or end-use energy efficiency as a strategy for climate change mitigation and energy reductions? Rethinking electric utilities efficienc," Energy Policy, Elsevier, vol. 67(C), pages 28-36.
    5. Sexton, Steven & Eyer, Jonathan, 2016. "Leveling the playing field of transportation fuels: Accounting for indirect emissions of natural gas," Energy Policy, Elsevier, vol. 95(C), pages 21-31.
    6. Victor Manuel Bennett & Lamar Pierce & Jason A. Snyder & Michael W. Toffel, 2012. "Competition and Illicit Quality," Harvard Business School Working Papers 12-071, Harvard Business School, revised May 2012.

    More about this item

    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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    1. Sacred Cars? Cost-Effective Regulation of Stationary and Nonstationary Pollution Sources (AEJ:EP 2012) in ReplicationWiki

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