Title: Beggar-thy-neighbor environmental policy? Evidence from California’s Truck and Bus Regulation 

Joint with Fiona Burlig, Michael Greenstone, Olga Rostapshova

Abstract: Incomplete environmental regulation can threaten or even reverse regulatory benefits through two channels. First, regulated actors, facing new costs, may attempt to evade the regulation entirely. Second, regulations can cause emissions “leakage:” an increase in emissions in a foreign jurisdiction in response to a new domestic regulation. We study these channels in the context of the California Truck and Bus Regulation (TBR). Transportation is a major contributor to particulate matter pollution, the greatest threat to human health globally. The goal of the TBR is to reduce emissions by requiring that trucks driving in California have relatively new, and thus clean, engines. The stringency of the regulation has increased over time. We leverage TBR’s phased-in rollout and extensive registration data in a difference-in-differences analysis to study the effects of TBR on leakage. Preliminary results suggest that TBR had a substantial impact on vehicle de-registration, especially for older trucks. To assess the extent of evasion, we use twenty-seven million records of random inspections from the Federal Motor Carrier Safety Administration to identify trucks who still drive in the state despite de-registering.

Search Costs, Intermediation, and Trade: Experimental Evidence from Ugandan Agricultural Markets

with Lauren Bergquist and Meredith Startz.

Abstract:

Search costs may be a barrier to market integration in developing countries, harming both producers and consumers. We present evidence from the large-scale experimental rollout of a mobile phone-based marketplace intended to reduce search costs for agricultural commodities in Uganda. We find that market integration improves substantially: trade increases and excess price dispersion falls by 20% between treated markets. This reflects price convergence across relative surplus and deficit markets, with no change on average. Interpreting the experimental variation through the lens of a model with fixed costs of search, we estimate that the marketplace caused a 5% reduction in total trade costs between treated markets. Contrary to the stated goals of the marketplace, but consistent with the existence of economies of scale in search or other trade costs, almost all activity on the platform is among larger traders, with very little use by smallholder farmers. Nevertheless, the benefits of improved arbitrage by traders appears to pass through to farmers in the form of higher revenues in surplus markets, as trader entry increases and measured trader profits decrease in response to falling search costs.