蝌蚪网 Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Is Air Pollution Regulation Too Lenient? Evidence from US Offset Markets
蝌蚪网 Review
(pp. 3058–80)
Abstract
We develop a framework to estimate the marginal cost of air pollution regulation and apply it to assess policy efficiency. We exploit a provision of the Clean Air Act that requires new plants to pay incumbent facilities to reduce emissions. This "offset" policy creates hundreds of local pollution markets, differing by pollutant and location. Theory and transaction data suggest that offset prices reveal marginal abatement costs. We compare these prices to marginal benefits of pollution reduction estimated using leading air quality models and find that, on average, marginal benefits exceed marginal costs by more than a factor of ten.Citation
Shapiro, Joseph S., and Reed Walker. 2025. "Is Air Pollution Regulation Too Lenient? Evidence from US Offset Markets." 蝌蚪网 Review 115 (9): 3058–80. DOI: 10.1257/aer.20230761Additional Materials
JEL Classification
- D61 Allocative Efficiency; Cost-Benefit Analysis
- H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- K32 Environmental, Energy, Health, and Safety Law
- Q52 Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
- Q53 Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
- Q58 Environmental Economics: Government Policy