Is there a ‘California effect’ in US environmental policymaking?

What determines state environmental policymaking in the US? Vogel (Trading Up: Consumer and Environmental Regulation in a Global Economy, Harvard University Press, Cambridge, MA, 1995; J. Eur. Pub. Pol. 4 (1997) 556–571) argues that California has been a de facto leader since the early 1970s in terms of automobile emissions standards. In this paper, we investigate the generality of California’s leadership role with respect to changes in overall pollution abatement expenditures. We present a simple model of yardstick competition in abatement costs. Using state-level panel data from 1977 to 1994 on abatement costs, our results indicate at best a minor role for California. Other states, in particular California’s immediate neighbors, do not appear to use California as a guideline.     

Economic and environmental analysis of buffer zones as an instrument to reduce ammonia loads to nature areas

In this paper, we present a Danish case study of the effectiveness and costs of protecting nitrogen poor nature areas vulnerable to ammonia eutrophication by appointing buffer zones around them. Buffer zones are found to be an important step towards sustainable co-existence of intensive livestock production and nature conservation when local sources are important contributors to eutrophication. Depending on the deposition patterns, buffer zones may be cost-effective compared to re-establishment of eutrophicated locations, but a need for further model analysis is also identified.     

Polluters and Collective Action: Theory and Evidence

We suggest a new perspective on firms' ability to organize collective action. We argue that industries that face a greater number of regulations have an easier time forming a lobby group and sustaining joint lobbying efforts. In particular, firms in industries that are pollution intensive, and therefore incur abatement costs, face an extra policy issue compared with other industries. The prediction that emerges from the theory is that more polluting industries should have greater levels of lobbying contributions. Using U.S. manufacturing sector data, we find empirical support for this hypothesis.     

The growth and welfare effects of international mass migration

We analyze the effects of immigration quotas on growth and welfare in a North-South version of the quality ladders growth model. Quotas in the North increase the growth rate. However, they lower the static utility level and the discounted welfare of Northern workers. Also the discounted welfare of asset owners drops. Hence, unlike in the static migration model where the representative agent in the host country benefits from immigration, in our dynamic model, the representative agent loses despite a positive growth effect. Winners from immigration quotas are the immigrants and the remaining workers in the South.     

R&D portfolios in environmentally friendly automotive propulsion: Variety, competition and policy implications

In this article, we analyze R&D portfolios in environmentally friendly automotive propulsion including alternative fuel options. We argue that at the current stage of development, substitution of conventional car technology by a new automotive propulsion technology may lead to premature lock-in of suboptimal technology. To avoid such lock-in, one should value the variety of current R&D activity that enables organizations to learn from multiple options and to create spillovers between options. We further argue that the existence of technological variety is not a sufficient condition to avoid lock-in. Organizational variety is also required to sustain competition and avoid the dominance of few firms that possibly enforce a suboptimal technology within the sector. To assess whether recent developments in R&D have led to both technological variety and organizational competition, we analyze United States Patent and Trademark Office (USPTO) patents in low-emission vehicles (LEVs) during the period 1980–2001 using entropy statistics. Results show that both technological variety and organizational competition have increased steadily since the early nineties, suggesting that premature lock-in is unlikely to occur. From an environmental policy evaluation perspective, we consider the findings as a positive evaluation of the 1990 Californian Low Emission Vehicle program.     

Strategic and Natural Risk in Entrepreneurship: An Experimental Study

We report on the results of experiments where participants choose between entrepreneurship and an outside option. Entrepreneurs enter a market and then make investment decisions to capture value. Payoffs depend on both strategic risk (i.e., the investments of other entrepreneurs) and natural risk (i.e., luck). Absent natural risk, participants endogenously sort themselves into entrepreneurial and safe types, and returns from the two paths converge. Adding natural risk fundamentally changes these conclusions: Here we observe excessive entry and excessive investment so that entrepreneurs earn systematically less than the outside option. These payoff differences persist even after many repetitions of the task. With a risky outside option, entry further increases and about one‐third of entrepreneurs adopt a passive strategy, investing little or nothing. Finally, we examine an environment where an individual must become an entrepreneur but chooses the stakes over which she will compete. Due to under‐entry and under‐investment in the high stakes setting, the returns gap grows to over 15 percentage points. A two‐factor model incorporating loss aversion and love of winning can rationalize these returns patterns.