Li, Zhe (2008): Productivity Dispersion across Plants, Emission Abatement, and Environmental Policy.
Download (286Kb) | Preview
Empirical studies suggest systematic relationships between plant’s productivity and plant’s emissions and emission-abatement costs. This paper demonstrates that productivity dispersion across plants is an important factor that influences the transmission of environmental policy. Within a general equilibrium framework, I model heterogeneous polluting plants by allowing them to be differing in productivity and to choose optimally a discrete emission-reduction technology taking into account both the costs of reducing emissions and the competition in the goods market. An emission-reduction policy affects the distribution of plants with the advanced abatement technology and relocates resources and market shares across plants. As a result, the aggregate effects of an environmental policy depend on the degree of productivity dispersion. Using Canadian data, I show quantitatively that the aggregate effects of an environmental policy significantly affected by the degree of productivity dispersion both in the transition periods and in the long-run steady-state equilibrium.
|Item Type:||MPRA Paper|
|Original Title:||Productivity Dispersion across Plants, Emission Abatement, and Environmental Policy|
|Subjects:||Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q52 - Pollution Control Adoption Costs; Distributional Effects; Employment Effects
E - Macroeconomics and Monetary Economics > E0 - General > E00 - General
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q58 - Government Policy
|Depositing User:||Zhe Li|
|Date Deposited:||15. Sep 2008 05:55|
|Last Modified:||12. Feb 2013 13:31|
Alvarez, Fernado, and Robert E. Lucas Jr., 2007. "General Equilibrium Analysis of the Eaton-Kortum Model of International Trade." Journal of Monetary Economics 54 (6), p. 1726-1768.
Antweiler, Werner, Brian R. Copeland and M. Scott Taylor, 2001. "Is Free Trade Good For The Environment?" American Economic Review, 91 (4), p. 877-908.
Bernard, Andrew, Jonathan Eaton, J. Bradford Jensen, and Sameul Kortum, 2003. "Plants and Productivity in International Trade." American Economic Review, 93 (4), p. 1268-1290.
Centre for the Study of Living Standards, 2006. "Aggregate Income and Productivity Trends: Canada versus United States." http://www.csls.ca/data/ipt1.asp Congressional Research Services, (by Larry Parker), 2004. "Global Climate Change: Controlling CO₂ Emissions --- Cost-Limiting Safety Valves." The Library of Congress.
Copeland, Brian R. and Taylor, M. Scott, 1994. "North-South Trade and the Environment." Quarterly Journal of Economics, 109(3), p. 755--787.
Copeland, Brian R. and Taylor, M. Scott, 1995. "Trade and Transboundary Pollution." American Economic Review, 85(4), p. 716--737.
Dewees, Donald, 2008. "Pollution and the Price of Power." The Energy Journal, April.
Dixit, A., and J. Stiglitz, 1977. "Monopolistic Competition and Optimum Product Diversity." American Economic Review, 67 (3), p. 297-308.
Dunne, Timothy, Mark J. Roberts, and Larry Samuelson, 1989. "The Growth and Failure of U.S. Manufacturing Plants." The Quarterly Journal of Economics, 104 (4), p. 671-698.
Eaton, Jonathan, and Samuel Kortum, 2002. "Technology, Geography, and Trade." Econometrica, 70 (5), p. 1741-1779.
Ghironi, Fabio, and Marc J. Melitz, 2005. "International Trade and Macroeconomic Dynamics with Heterogeneous Firms."
The Quarterly Journal of Economics, 120 (3), p. 865-915. Gottinger,H., 1998. "Greenhouse Gas Emissions and Computable General Equilibrium." Journal of Policy Modeling, 20 (5), p. 537-580.
Gray, Wayne B., and Ronald J. Shadbegian, 1995. "Pollution Abatement Costs, Regulation, and Plant-level Productivity." NBER working paper No. 4994.
Gray, Wayne B., and Ronald J. Shadbegian, 1998. "Environmental Regulation, Investment Timing, and Technology Choice." The Journal of Industrial Economics, 46 (2) p. 235-256.
Gray, Wayne B., and Ronald J. Shadbegian, 2003. "Plant Vintage, Technology, and Environmental Regulation." Journal of Environmental Economics and Management, 46 (3) p. 384-402.
Grossman, G. and A. Krueger, 1995. "Economic Growth and the Environment." Quarterly Journal of Economics, 110 (2), p. 353-377.
Hazilla, Michael, and Raymond J. Kopp, 1990. "Social Cost of Environmental Quality Regulations: A General Equilibrium Analysis." The Journal of Political Economy, 98 (4), p. 853-873.
Heutel, Garth, 2006. "Plant Vintages, Grandfathering, and Environmental Policy." manuscript.
Hopenhayn, Hugo A., 1992. "Entry, Exit, and firm Dynamics in Long Run Equilibrium." Econometrica. 60 (5), p. 1127-1150.
Jorgenson, D., and P. Wilcoxen, 1990. "Intertemporal General Equilibrium Modeling of U.S. Environmental Regulation." Journal of Policy Modeling, 12 (4), p. 715-744.
Lopez, Ramon, 1994. "The Environment as a Factor of Production: The Effects of Economic Growth and Trade Liberalization." Journal of Environmental Economics and Management 27(2), p. 185--204.
Melitz, Marc J., 2003. "The Impact of Trade on Intra-industry Reallocations and Aggregate Industry Productivity." Econometrica, 71 (6), p. 1695-1725.
Nordhaus, D. William, 1993. "Optimal Greenhouse Gas Reductions and Tax Policy in the "DICE" Model." The American Economic Review, 83 (2), p. 313-317.
Restuccia, Diego, and Richard Rogerson, 2008. "Policy Distortions and Aggregate Productivity with Heterogeneous Plants." Review of Economic Dynamics, forth coming.
Rotemberg, Julio J., and Michael Woodford, 1992. "Oligopolistic Pricing and the Effects of Aggregate Demand on Economic Activity." Journal of Political Economy, 100 (6) p.1153--1207.
Statistics Canada, Environment Accounts and Statistics Division, System of National Accounts, 2004. "Environmental Protection Expenditures in the Business Sector." Catalogue no.16F0006XIE. Ottawa, www.statcan.ca.
Statistics Canada, Environment Accounts and Statistics Division, System of National Accounts, by Rowena Orok, 2005. "GreenHouse Gas Reduction Technologies: Industry Expenditures and Business Opportunities." Catalogue no. 16-001-MIE --- No. 002, Ottawa.
Selden, T. and D. Song, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?" Journal of Environmental Economics and Management, 27(2), p.147-162.
Shadbegian, Ronald J. and Wayne B. Gray, 2003. "What Determines Environmental Performance at Paper Mills? The Roles of Abatement Spending, Regulation, and Efficiency." Topics in Economic Analysis and Policy, 3 (1) p. 1144-1174. Stokey, N. L., 1998. "Are There Limits to Growth?" International Economic Review, 39 (1), p. 1-31.
T. Truong, 1999. "GTAP-E: Incorporating Energy Substitution into GTAP Model." GTAP Technical Paper, Center for Global Trade Analysis, Purdue University.
Zhang, Z. X., 1998. "Macroeconomic Effects of CO2 Emission Limits: A Computable General Equilibrium Analysis for China." Journal of Policy Modeling, 20 (2), p. 213-250.