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American Economic Review: Vol. 102 No. 2 (April 2012)

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What Do Emissions Markets Deliver and to Whom? Evidence from Southern California's NOx Trading Program

Article Citation

Fowlie, Meredith, Stephen P. Holland, and Erin T. Mansur. 2012. "What Do Emissions Markets Deliver and to Whom? Evidence from Southern California's NOx Trading Program." American Economic Review, 102(2): 965-93.

DOI: 10.1257/aer.102.2.965

Abstract

An advantage of cap-and-trade programs over more prescriptive environmental regulation is that compliance flexibility and cost effectiveness can make more stringent emissions reductions politically feasible. However, when markets (versus regulators) determine where emissions occur, it becomes more difficult to assure that mandated emissions reductions are equitably achieved. We investigate these issues in the context of Southern California's RECLAIM program by matching facilities in RECLAIM with similar California facilities also in nonattainment areas. Our results indicate that average emissions fell 20 percent at RECLAIM facilities relative to our counterfactual. Furthermore, observed changes in emissions do not vary significantly with neighborhood demographic characteristics. (JEL H23, L51, Q53, Q58)

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Authors

Fowlie, Meredith (U CA, Berkeley)
Holland, Stephen P. (U NC, Greensboro)
Mansur, Erin T. (Dartmouth College)

JEL Classifications

H23: Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
L51: Economics of Regulation
Q53: Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
Q58: Environmental Economics: Government Policy


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