The Effects of Regulation in the Presence of Multiple Unpriced Externalities: Evidence from the Transportation Sector

41 Pages Posted: 17 Feb 2013

See all articles by Antonio M. Bento

Antonio M. Bento

Cornell University - Charles H. Dyson School of Applied Economics and Management

Daniel Kaffine

Colorado School of Mines - Division of Economics and Business

Kevin Roth

Cornell University

Matthew Zaragoza

University of California, Berkeley

Date Written: February 16, 2013

Abstract

In transportation systems with unpriced congestion, allowing single-occupant low-emission vehicles in high occupancy vehicle (HOV) lanes to encourage their adoption exacerbates congestion costs for carpoolers. The resulting welfare effects of the policy are negative, with environmental benefits overwhelmingly dominated by the increased congestion costs. Exploiting the introduction of the Clean Air Vehicle Stickers policy in California with a regression discontinuity design, our results imply a best-case cost of $124 per ton of reductions in greenhouse gases, $606,000 dollars per ton of nitrogen oxides reduction, and $505,000 dollars per ton of hydrocarbon reduction, exceeding those of other options readily available to policymakers.

Keywords: Hybrid Vehicles, Regression Discontinuity, Air Pollution, congestion

JEL Classification: H23, R41, R48, Q52, Q58

Suggested Citation

Bento, Antonio M. and Kaffine, Daniel and Roth, Kevin and Zaragoza, Matthew, The Effects of Regulation in the Presence of Multiple Unpriced Externalities: Evidence from the Transportation Sector (February 16, 2013). Available at SSRN: https://ssrn.com/abstract=2219491 or http://dx.doi.org/10.2139/ssrn.2219491

Antonio M. Bento (Contact Author)

Cornell University - Charles H. Dyson School of Applied Economics and Management ( email )

Ithaca, NY
United States

Daniel Kaffine

Colorado School of Mines - Division of Economics and Business ( email )

1500 Illinois Street
Golden, CO 80401
United States

Kevin Roth

Cornell University ( email )

Ithaca, NY 14853
United States

Matthew Zaragoza

University of California, Berkeley ( email )

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