Sacred Cars? Optimal Regulation of Stationary and Non-stationary Pollution Sources
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 (NOx), the criteria air pollutant that has proven to be the most recalcitrant in the United States. We find significant differences in marginal abatement costs across source types with the marginal cost of reducing NOx from cars less than half of the marginal cost of reducing NOx from power plants. Our findings have important implications for the efficiency of NOx emissions reductions and, more broadly, the benefits from increasing the sectoral scope of environmental regulation. We estimate that the costs of achieving the desired emissions reductions could have been reduced by nearly $2 billion, or 9 percent of program costs, had marginal abatement costs been equated across source types.
We would like to thank Leigh Linden, Erin Mansur and seminar participants at Columbia University, Ohio State University, UC Davis, UC San Diego, UC Santa Barbara and the National Bureau of Economic Research for valuable comments. Justin Gallagher, Rob Seamans and Orie Shelef provided excellent research assistance. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
- There is significant potential for efficiency improvements from coordinating abatement activity across mobile- and point-source pollution...