NBER Working Papers by B. Andrew Chupp

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Working Papers

July 2015The Impact of Trading on the Costs and Benefits of the Acid Rain Program
with H. Ron Chan, Maureen L. Cropper, Nicholas Z. Muller: w21383
This study quantifies the cost savings from the Acid Rain Program (ARP) compared with a command-and-control alternative and also examines the impact of trading under the ARP on health damages. To quantify cost savings, we compare compliance costs for non-NSPS (New Source Performance Standards) coal-fired Electricity Generating Units (EGUs) under the ARP with compliance costs under a uniform performance standard that achieves the same aggregate emissions. We do this for the year 2002, the third year of Phase II of the program. We find annual cost savings of approximately $240 million (1995$). To examine the health effects of trading, we compute the health damages associated with observed sulfur dioxide (SO2) emissions from all units regulated under the ARP in 2002—approximately 10.2 million...
January 2010Heterogeneous Harm vs. Spatial Spillovers: Environmental Federalism and US Air Pollution
with H. Spencer Banzhaf: w15666
The economics of environmental federalism identifies two book-end departures from the first-best, which equates marginal costs and benefits in all local jurisdictions. Local governments may respond to local conditions, but ignore inter-jurisdictional spillovers. Alternatively, central governments may internalize spillovers, but impose uniform regulations ignoring local hetero-geneity. We provide a simple model that demonstrates that the choice of policy depends crucial-ly on the shape of marginal abatement costs. If marginal costs are increasing and convex, then abatement cost elasticities will tend to be higher around the local policies. This increases the deadweight loss of those policies relative to the centralized policy, ceteris paribus. Using a large simulation model, we then...

Published: "Fiscal Federalism and Interjurisdictional Extern alities: New Results and an Application to US Air Pollution," Journal of Public Economics 96, 2012, pp. 449-464 (with B.A. Chupp).

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