Efficiency and distributional impacts of environmental regulation

Efficiency and distributional impacts of environmental regulation

4.11 - 1251 ratings - Source

This dissertation addresses the efficiency and distributional impacts of environmental policy. An empirical approach is taken in the first two chapters, describing the impacts of a gasoline tax and national fuel economy standards directed at reducing gasoline consumption in the U.S. The third chapter presents an analytical model that describes the relationship between efficiency impacts and distributional requirements in a more general setting. An empirically estimated model of demand for automobiles and miles traveled is combined with an equilibrium simulation of policy. Each one cent increase in the gasoline tax reduces the consumption of gasoline by about two tenths of one percent. The distributional effects depend critically on the manner in which revenue is redistributed to households. In particular, a flat recycling scheme, where each household receives a rebate for the same amount, generates progressive impacts along the income distribution. The analysis of fuel economy standards combines the model of household demand with an equilibrium model of firm behavior that accounts for heterogeneous response to the regulation. When compared with a gasoline tax that achieves the same reduction in fuel use, fuel economy standards are more than six times as costly. Furthermore, and in contrast with previous studies, the simulation results show that fuel economy standards generate a regressive distributional impact due to their long run effects on the used car market. The third chapter compares the overall efficiency impacts of price based policies with those of direct regulation under the distributional restriction that firms be compensated for their losses. The distributional requirement can reverse the traditional efficiency ranking (empirically supported in the earlier chapters) that price or tax based policies outperform direct regulatory standards: When significant distributional constraints must be met, command regulation can be preferred to price based environmental policy.Moreover, the description of automobiles in the NHTS is highly aggregated - we only know the make, model, and 2 An example about the nature of the problem we confronted may be instructive. Consider a 1995 Honda Civic. In one data set, anbsp;...

Title:Efficiency and distributional impacts of environmental regulation
Author:Mark R. Jacobsen, Stanford University. Dept. of Economics
Publisher: - 2007


You Must CONTINUE and create a free account to access unlimited downloads & streaming