Sacred Cars? Optimal Regulation of Stationary and Non-stationary Pollution Sources

Meredith Fowlie, Christopher R. Knittel, Catherine Wolfram

NBER Working Paper No. 14504
Issued in November 2008
NBER Program(s):Environment and Energy Economics, Industrial Organization

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.

download in pdf format
   (454 K)

email paper

A non-technical summary of this paper is available in the April 2009 NBER Digest.  You can sign up to receive the NBER Digest by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w14504

Published: American economic journal : a journal of the American Economic Association.- Nashville, Tenn. : AEA, ISSN 1945-7731, ZDB-ID 24423828. - Vol. 4.2012, 1, p. 98-126

Users who downloaded this paper also downloaded* these:
Cropper, Jiang, Alberini, and Baur w15904 Getting Cars Off the Road: The Cost-Effectiveness of an Episodic Pollution Control Program
Knittel w15162 Automobiles on Steroids: Product Attribute Trade-Offs and Technological Progress in the Automobile Sector
Hughes, Knittel, and Sperling w12530 Evidence of a Shift in the Short-Run Price Elasticity of Gasoline Demand
Marimon and Zilibotti w6038 Unemployment vs. Mismatch of Talents: Reconsidering Unemployment Benefits
Fowlie, Holland, and Mansur w15082 What Do Emissions Markets Deliver and to Whom? Evidence from Southern California's NOx Trading Program
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us