Choices involving tradeo¤s of bene…ts and costs over time are pervasive in our everyday lives. The observation of declining discount rates in experimental settings has led many to promote hyperbolic discounting over standard exponential discounting as the preferred descriptive model of intertemporal choice. In this paper, I develop a new framework that directly models the intertemporal utility ...

Electric vehicles offer the promise of reduced environmental externalities relative to their gasoline counterparts. We determine the spatial heterogeneity in these externalities and evaluate several spatially-differentiated policies to correct them. To do this, we combine a discrete-choice model of new vehicle purchases, an econometric analysis of the electric power industry, and the AP2 air po...

This paper investigates an environmental policy designed to reduce the emission of pollutants under uncertainty, where the agents’ problem is formulated as an optimal stopping problem. We first analyze the single-agent’s case according to Pindyck [Pindyck, R.S., 2002. Optimal timing problems in environmental economics. Journal of Economic Dynamics and Control 26, 1677–1697]. We then extend the ...

In most countries, environmental regulation focuses on local pollution, which causes damages near the emission source, while regulation on global pollutants such as greenhouse gases (GHG) has been slow. Theoretically, local and global pollutants can either be substitutes or complements in production, implying that local pollution regulation may either intensify or reduce global warming concerns...

Designing markets for pollution when damages vary across sources : Evidence from the NOx Budget Program. Existing and planned emissions trading programs are almost exclusively “emissions-based”, meaning that a permit can be used to o¤set a ton of pollution, regardless of where in the program region the ton is emitted. Designing programs in this way presumes that the health and environmental dam...

Although panel data have been used intensively by a wealth of studies investigating the GDP-pollution relationship, the poolability assumption used to model these data is almost never addressed. This paper applies a strategy to test the poolability assumption with methods robust to functional misspecification. Nonparametric poolability tests are performed to check the temporal and spatial homog...

Consumers are often uninformed, or unsure, about the ambient level of environmental risk. An optimal policy must jointly determine efficient levels of self-protection, information provision, and public risk mitigation efforts. Unfortunately, conventional welfare measures are not amenable to welfare analysis in the presence of imperfect information. We develop a theoretical welfare measure, call...

Standard economic theory predicts that if property rights to pollute are clearly established, equilibrium outcomes in an effi cient emissions permit market will be independent of how the emissions permits are initially distributed. This so-called independence property has important implications for policy design and implementation. Past studies document a strong positive correlation between the...