the housing market impacts of shale gas development using data from pennsylvania and an array of empirical techniques to control for confounding factors we recover hedonic estimates of property value impacts from nearby shale gas development that vary with water source well productivity and visibility results indicate large negative impacts on nearby groundwater dependent homes while piped water dependent homes exhibit smaller positive impacts suggesting benefits from lease payments results have implications for the debate over regulation of shale gas development jel l71 q35 q53 r31 technological improvements in the extraction of oil and natural gas from unconventional sources have transformed communities and landscapes and brought debate and controversy in the policy arena shale gas plays underlying the populated northeastern united states were thought to be uneconomical less than ten years ago but now contribute a major share of us gas supply 1 natural gas has been hailed as a bridge to energy independence and a clean future because of its domestic sourcing and compared with coal and petroleum derivatives its smaller carbon footprint and reduced emissions of other pollutants e g particulates sulfur dioxide car

do better schools matter parental valuation of elementary education the evaluation of numerous school reforms requires an understanding of the value of better schools given the difficulty of calculating the relationship between school quality and student outcomes i turn to another method and use house prices to infer the value parents place on school quality i look within school districts at houses located on attendance district boundaries houses then differ only by the elementary school the child attends i thereby effectively remove the variation in neighborhoods taxes and school spending i find that parents are willing to pay 2 5 percent more for a 5 percent increase in test scores this finding is robust to a number of sensitivity checks

corruption trade and resource conversion abstract recent evidence suggests that special interest groups significantly affect tropical deforestation through lobbying we develop an open economy model in which resource conversion is determined by a self interested government that is susceptible to the influences of the political contributions it receives from the profit maximizing economic agent responsible for land conversion we investigate the effects of lobbying on the cumulative level of resource conversion and examine how trade policy influences the distortions created by political corruption we derive testable predictions that are analyzed through a panel analysis of cumulative agricultural land expansion over 1960 99 for low and middle income tropical countries our findings suggest that increased corruption and resource dependency directly promote land conversion whereas rising terms of trade reduce conversion

common agency and coordination general theory and application to government policy making we develop a model of common agency with complete information and general preferences with nontransferable utility and we prove that the principals nash equilibrium in truthful strategies implements an efficient action we apply this theory to the construction of a positive model of public finance where organized special interests can lobby the government for consumer and producer taxes or subsidies and targeted lump sum taxes or transfers the lobbies use only the nondistorting transfers in their noncooperative equilibrium but their intergroup competition for transfers turns into a prisoners dilemma in which the government captures all the gain that is potentially available to the parties

environmental policy public interest and political market in this paper we highlight the factorswhich influence governments in theirdecision to implement environmentalpolicies of varying degrees of severity wesubstantiate our arguments with analyticalevidence from the public interest theoryand the economic theory of regulation interest group theory we show throughempirical analysis based on the policies of22 oecd countries that pressure groupshave sufficient impact on environmentalregulation so that the economic theorypredominates over the public interesttheory

international externalities strategic interaction and domestic politics abstract domestic politics can sometimes play an influential role when externalities have strategic and international implications if voters delegate the choice to policymakers and if individual countries independently determine their environmental policy using a consumption tax on the emissions generating good the result could be an outcome that is inferior to the one preferred by the median voter in the absence of delegation on the other hand if the international externality is unilateral in nature rather than reciprocal we find that delegation is largely irrelevant since voters choice of policymaker is no longer strategic in character similarly if voters anticipate policymakers successfully coordinating their policies at a later stage there also will be no difference between the policymakers and the median voters aggregate weighting of environmental emissions

is what you see what you get the value of natural landscape views views of natural areas and green space may have value quite apart from access to those lands using 25 years of home sales data from st louis county missouri and modern geographic information system tools to measure views we estimate a hedonic property fixed effects model that captures the effects of changing land cover on house sale prices unlike previous studies our approach minimizes bias from omitted variables and uniquely captures changes over time we find that forest views negatively affect home prices whereas farmland views have positive effects changes in relative scarcity of these land types over time may explain the findings

trade liberalization and environmental taxation in federal systems the literature on trade liberalization and environment has not yet considered federal structures in this paper we show how the design of environmental policy in a federal system has implications for the effects of trade reform trade liberalization leads to a decline in pollution taxes regardless of whether pollution taxes are set at the federal centralized or local decentralized level and it increases social welfare the effect under a decentralized system is smaller than if these taxes are set by the federal government and pollution emissions therefore decline in this case moreover majority bias interacts with trade liberalization if federal taxes are used

political internalization of economic externalities and environmental policy abstract this paper derives the characteristics of endogenous environmental policy in a common agency model of politics and proceeds to show that competition between lobby groups is an important source of internalization of economic externalities our analysis generalizes bhagwati s principle of targeting to the case of distorted political markets moreover we show that the politically optimal structure of environmental taxes incorporates a pigouvian adjustment however since lobby groups care about the distribution of income as well as about efficiency the equilibrium structure of taxes differs considerably from the pigouvian rule

outward foreign direct investment patterns of italian firms in the european union s emission trading scheme we consider the role played by the european union s emissions trading system eu ets as a possible driver of outward foreign direct investment fdi for italian manufacturing firms using a panel dataset of about 22 000 firms covering the first two phases of the eu ets and the period before the eu ets we measure the patterns of fdi towards countries not covered by the eu ets the results show that the eu ets had a weak effect on the number of new subsidiaries abroad extensive margin while it had a larger impact on production taking place in foreign subsidiaries intensive margin especially in trade intensive sectors

measuring environmental effects on property values without hedonic regressions abstract the effect of environmental nuisances on property values has been frequently studied using hedonic regressions yet that method has extensive data and estimation requirements the technique developed in this paper uses repeat sales on houses to substantially reduce these requirements the technique adjusts for depreciation between sales and allows for nonzero error covariance terms when a house has been sold more than twice the effect of highway noise on property values is studied using this method and the results are statistically equivalent to the results of an extensive hedonic study for the same area

international trade and environmental quality how important are the linkages this paper develops a numerical general equilibrium model of the world economy with local and global environmental externalities the model is then used to investigate the relationship between trade and the environment the authors results suggest that international trade has little impact on environmental quality furthermore the magnitude of the welfare effects of environmental policies is not significantly affected by changes in trade policies at the same time the size and distribution of the gains from trade liberalization appear to be little affected by changes in environmental policies

committee assignments constituent preferences and campaign contributions committee assignments constituent preferences and campaign constributions the familiar economic model of regulation as developed by stigler 1971 peltzman 1976 and becker 1983 posits an essentially frictionless market process for regulatory policy formation in which a single regulator legislator chooses policy to maximize net support from competing groups in this paper we extend the supply side of this model by considering the effect of legislative institutions and unorganized constituent preferences on the ability of incumbents in the house of representatives to serve specific interest groups we then test this formulation by examining the recent history of interest group campaign contributions to these legislators our theoretical model concentrates on how a legislator allocates time between serving specific interest groups outside his district and serving his constituency we do not model interest group decisions directly assuming simply that they purchase their desired amount of service from the lowest cost suppliers our model sorts legislators by the supply price at which they can serve a particular group this price depends on the preferences of the voters in the legislators district and the productivity of the legislator in producing policy service for each group 1 the empirical section tests the model by examining the pattern of interest group campaign contributions to house incumbents from 1978 through 1984 our regression analysis tends to confirm both implications of the theory first the pattern of campaign contributions from specific interest groups to legislators is shaped by the division of substantive legislative and regulatory jurisdictions represented by the system of house standing committees second voter preferences influence the pattern of contributions by affecting the supply price at which a legislator can offer policy to interest groups legislators with sympathetic or indifferent constituencies are able to offer a lower price and are therefore able to attract larger sums than those with hostile constituencies these results are important for two reasons first the influence of congressional institutions such as committees on policy is not widely accepted while several studies faith levins and tollison 1982 weingast and moran 1983 weingast 1984 grier 1989 and robert 1990 have documented the effects of changes in a particular committee on policies under its jurisdiction this work considers the jurisdiction of only a single committee in each case 2 by examining the linkages between congressional committees and political action committees pacs we investigate whether interest groups act as if committees have power second while the chicago model of regulation emphasizes correctly in our view that policy is the result of vote maximizing calculations and the incremental balancing nature of any equilibrium the model is imprecise about which sets of preferences are most important in determining the levels of policy or the size of changes in policies focusing on committees promotes a parsimonious specification of both the political players members of the relevant committee rather than the entire congress and the pivotal voters committee members constituencies more than the nation determining specific policy outcomes the paper is organized as follows section i reviews some issues on the nature and sources of committee influence in the u s congress the second section incorporates committee assignments into a theory of decision making by interest group investors sections iii and iv describe our data and estimation technique and present the empirical results the fifth and final section discusses some implications and conclusions of this research i committee power in congress legislators differ substantively by virtue of their committee assignments committees in congress and particularly in the house of representatives possess disproportionate power over the policy areas in their respective jurisdictions have the right to hold hearings and recommend budget allocations for the bureaus in their jurisdiction goodwin 1970

do capitalization effects for public goods reveal the public s willingness to pay this article develops a welfare theoretic framework for interpreting evidence on the impacts of public programs on housing markets we extend rosen s hedonic model to explain how housing prices capitalize exogenous shocks to public goods and externalities the model predicts that trading between heterogeneous buyers and sellers will drive a wedge between these capitalization effects and welfare changes we test this hypothesis in the context of changes in measures of school quality in five metropolitan areas results from boundary discontinuity designs suggest that capitalization effects understate parents willingness to pay for public school improvements by as much as 75

how pollution taxes may increase pollution and reduce net revenues this paper develops a positive theory of pollution taxation by a federal authority when pollution abatement subsidies are used by local governments environmental and industry lobby groups influence governments with campaign contributions first pollution may increase in the pollution tax because the abatement subsidy increases decreases with the tax and pollution increases decreases in the abatement subsidy this occurs because the lobbying incentives change at a pollution tax reform second pollution taxes may reduce net revenues because subsidy expenditures rise third pollution may increase simultaneously as net revenues fall finally the welfare effect of a pollution tax may be negative

on the choice of funtional form for hedonic price functions this study examines how errors in measuring marginal attribute pric es vary with the form of the hedonic price function in simulations consumers with known utility functions bid for houses with given attributes various forms of the hedonic function are estimated using equilibrium housing prices errors in estimating marginal attribute prices are calculated by comparing each consumer s equilibrium marginal bid vector with the gradient of the hedonic function when all attributes are observed linear and quadratic box cox forms produce lowest mean percentage errors however when some attributes are unobserved or are replaced by proxies linear and linear box cox functions perform best copyright 1988 by mit press

which hedonic models can we trust to recover the marginal willingness to pay for environmental amenities abstract the hedonic property value model is among our foremost tools for evaluating the economic consequences of policies that target the supply of local public goods environmental services and urban amenities we design a theoretically consistent and empirically realistic monte carlo study of whether omitted variables seriously undermine the method s ability to accurately identify economic values our results suggest that large gains in accuracy can be realized by moving from the standard linear specifications for the price function to a more flexible framework that uses a combination of spatial fixed effects quasi experimental identification and temporal controls for housing market adjustment

the optimal distribution of pollution rights in the presence of political distortions a critical issue in designing a system of tradable emission permits concerns the distribution of the initial pollution rights the purpose of this paper is to investigate how the initial rights should be optimally set when the determination of the number of tradable permits is subject to the influence of interest groups according to the coase theorem in the case where there are low transaction costs the assignment of the initial rights does not affect the efficiency of the final resource allocation in the presence of political pressure we show that the distribution of the initial rights has a significant effect on social welfare in contrast to the conventional results we find that grandfathered permits may be more efficient than auctioned permits even after taking into consideration the revenue recycling effect

endogenous lobby formation and endogenous environmental protection with unilateral tariff reduction this paper studies how one country s decision to liberalize trade affects the political economic structure that determines environmental policy in another country by constructing a political economy model in which the formation of lobby groups and environmental policy are endogenously determined we show that unilateral tariff reductions by a large country importing a polluting good will generate a lobby group with a relatively lower cost of organization in a small country exporting that good a formulated lobby demands an inefficient environmental policy and hence the small country s environmental regulations become less efficient then we show that when a lobby already exists unilateral tariff reductions result in the formation of a rival lobby and consequently make the small country s environmental policy more efficient

the siting of hazardous waste facilities in federal systems the political economy of nimby this paper offers a new political economy explanation for thepervasive problem of siting hazardous waste treatment facilitiesin federal system we first show that a decentralized systemyields the first best waste treatment capacity level and that acentralized structure gives rise to free riding behavior amonglocal jurisdictions in our model each community seeks toinfluence the central government through political contributions this leads to suboptimal levels of treatment capacity thecapacity is increasing in the compensation level if the marginalbenefit of treatment capacity is sufficiently large and in thegovernment s weight on aggregate social welfare relative tolobbying activities the centralized system can replicate thedecentralized system with a sufficiently high compensation level since compensation has proved difficult a centralized systemfaces greater obstacles than a decentralized system

viewscapes and flood hazard coastal housing market response to amenities and risk coastal amenities and risk are so highly correlated that separate identification within the hedonic framework is potentially challenging in this study we construct a three dimensional measure of ocean view viewscape accounting for natural topography and built obstruction that varies independent of risk classification to disentangle these spatially integrated housing characteristics a spatial autoregressive hedonic model is developed to provide consistent estimates of the willingness to pay for coastal amenities and risk our findings suggest that incorporating the gis based view measures can be successful in isolating risk factors from spatial amenities

environmental regulation whose self interests are being protected special interest can explain why environmental policy limits economic activity in areas where air quality is above minumum standards locational competition among region helped create a policy that raised factor mobility cost from slower to faster growing regions analysis of votes shows greater support for this policy was received from northern urban constituencies and the greatest opposition came from the south and the west pollution abatement costs per unit of output are higher in areas with higher not lower air quality

environmental regulations transfers and trade theory and evidence abstract this paper develops a theory of compensation of producers for the costs associated with environmental regulations we show that the existence of transfers can give counter intuitive effects of environmental policy on both output and trade flows in particular the compensation obtained by producers neutralizes the effect of environmental policy on output and consequently on trade flows this may help explain why previous empirical research has found weak evidence that environmental regulations affect trade patterns the theory is tested using agricultural sector data the evidence supports the hypothesis that environmental regulations and transfers are positively correlated

environmental regulation induced foreign direct investment the last decade has witnessed a renewed interest in the relationship between environmental regulations and international capital flows however empirical studies have so far failed to find conclusive evidence for this so called pollution haven or race to the bottom effect where foreign direct investment fdi is assumed to be attracted to low regulation countries regions or states in this paper we present a simple theoretical framework to demonstrate that greater stringency in environmental standards can lead to a strategic increase in capital inflows which we refer to as environmental regulation induced fdi our result reveals a possible explanation for the mixed results in the empirical literature and provides an illustration of the conditions under which environmental regulations in the host country can affect the location decision of foreign firms

estimates of the impact of crime risk on property values from megan s laws abstract we estimate the willingness to pay for reductions in crime risk using the location and move in dates of sex offenders we find significant effects of sex offenders locations that are geographically localized house prices within 0 1 miles of a sex offender fall by 4 percent on average we then use this finding to estimate the costs to victims of sexual offenses and find costs of over 1 million per victim far greater than previous estimates however we cannot reject the alternative hypotheses that individuals overestimate risks posed by offenders or that living near an offender poses significant costs exclusive of crime risk jel k42 r23 r31

the political economy of trade liberalization and environmental policy a pressure group model where environmental and industry lobby groups offer political support in return for favorable pollution tax policies is used to explain and predict the equilibrium pollution tax in sectors protected by tariffs the political economy effects of trade liberalization are investigated the pollution tax is shown to decrease if the lobbying effort by the environmental lobby decreases more rapidly than by the industry lobby ceteris paribus the level of political conflict falls with trade liberalization pollution may increase because of a reduction of the pollution tax and tax revenues may fall simultaneously as pollution increases the global trading system is currently undergoing another round of multilateral trade liberalization and regional economic integration is occurring in several parts of the world the trade environment link has become an important part of trade liberalization talks it is commonplace for industry representatives to argue that less stringent environmental regulations give less developed countries ldcs a comparative advantage in pollution intensive goods and that industries with high abatement costs will migrate to ldcs environmentalists argue that international differences in environmental laws and regulations may be reduced to their lowest common denominator through political pressure this is not a fear of trade liberalization itself but of the effects of lower trade barriers on the political determination of environmental regulation

trading rules and the environment does equal treatment lead to a cleaner world abstract in this paper we consider a three stage game in the context of a competing exporters model to compare and contrast the effects of discriminatory and uniform most favored nation mfn tariffs on countries choice over environmental standards for varying degrees of pollution spillovers because of the presence of punishment effects and stronger own and cross tariff effects we find that discrimination yields higher standards than mfn and free trade independently of the extent of pollution spillovers when pollution is local and incentives to free ride on other countries abatement efforts are weak we show however that welfare is larger under mfn than under discrimination in a dynamic setting we consider the impact of symmetric and asymmetric treatments on the sustainability of an international environmental agreement iea and obtain that multilateral cooperation is easier to sustain under discrimination than under mfn or free trade

governance and renewable energy investment in mena countries how does trade matter abstract the middle east and north africa mena countries have recently developed renewable energy re markets however their rate of investment in renewable energy remains small compared to other regions in the world despite their relatively abundant endowments particularly in wind and solar while the literature identifies some barriers to investment in renewable energy we assume that the investment of mena countries could be impeded by specific governance factors furthermore we consider recent literature showing that trade openness reduces the negative effects of weak governance in this paper we empirically investigate the link between governance openness and renewable energy investment in the mena region using panel data for 15 mena countries over the period 1996 2013 our results prove that high institutional quality is associated with re investment in mena countries in addition this relationship seems to be conditional on the trade regime our results are robust to several measures of renewable energy investment and governance as well as to an alternative econometric set up

the political economy of pollution taxes in a small open economy abstract this paper develops a positive theory explaining pollution tax policy outcomes in a small open economy the equilibrium tax rate depends on lobby group membership the relative importance of lobbying activities and the tax elasticity of pollution the equilibrium properties are investigated the model is extended to incorporate pollution abatement and a pollution abatement subsidy we show that total pollution may be increasing in the pollution abatement subsidy rate this effect arises because the equilibrium pollution tax rate may be decreasing in the subsidy rate due to altered political influence of the lobby groups in the political equilibrium

optimal policy toward international factor movements with a country specific factor abstract this paper examines the optimal taxation of factor movements in a three factor model where two factors are potentially mobile results emphasize the role of substitutability or complementarity between factors in determining the optimal pattern of factor flows in particular a result analogous to the ramaswami result on the desirability of factor importing over factor exporting will hold if factors are complements but may not hold if they are substitutes also a capitalexporting country that cannot tax imported labor should allow labor imports when capital and labor are substitutes but may not allow labor imports if they are complements

strategic voting for noncooperative environmental policies in open economies in this paper we construct a political economy model of strategic environmental policymaking with different degrees of product differentiation and different market structures and examine how strategic voting decisions are affected by the choice of environmental policy instruments tax or standard we show that in a cournot market structure voters elect tax setting policymakers who are more green than themselves when product differentiation and or environmental externalities are more prominent in a bertrand market structure they elect more green tax setting policymakers than themselves on the other hand they elect standard setting policymakers who are less green than themselves the results confirm the advantage of the overall use of emission tax over that of emission standard regarding the welfare effect of strategic voting

trade policy reform endogenous lobby group formation and environmental policy abstract this paper explores the effects of trade liberalization on environmental policy outcomes when collective action is endogenous the polluting industry s ability to undertake lobbying is shown to depend on the degree of competition in the product market establishing a new link between trade and environmental policies if trade liberalization causes industry collective action to become harder to sustain the stringency of the environmental policy is likely to rise these results highlight the role of trade liberalization on product market competition and its consequent impact on the incentive to lobby for less stringent environmental policies

do seller disclosures affect property values buyer information and the hedonic model the hedonic method is widely used to infer the value of environmental amenities that are bundled with real property the interpretation of hedonic prices as marginal values requires that households are fully informed yet there is evidence that buyers are often less informed than sellers a graphical illustration in this study suggests that asymmetric information between buyers and sellers can affect hedonic prices this intuition is confirmed by a quasi random experiment that exploits spatial and information discontinuities stemming from a seller disclosure for flood zones results suggest a 4 decline in housing prices in flood zones after disclosures commenced

are contributors rational untangling strategies of political action committees empirical public choice literature and casual observation suggest that the behavior of political action committees is remarkably unsophisticated meaning that pacs give to those legislators who would support their interests anyway thus it is suggested that contributor behavior deviates from rational behavior which is a cornerstone of economic analysis in this paper a switching regression model is estimated that allows for strategies of pacs to vary for different contribution recipients i analyze the behavior of farm pacs over three election cycles in contrast to previous findings i find that contributor behavior is not inconsistent with rational behavior contributors who attempt to influence the voting behavior of members of congress give the most money to legislators whose constituency interest suggests that they are likely to be undecided on how to vote and pacs give less money to legislators who represent districts with larger farm populations because those legislators are likely to vote in con

green lobbies and transboundary pollution in large open economies abstract we employ a common agency model of policy making to examine how green lobbies affect the determination of trade and environmental policies in two large countries that are linked by trade flows and transboundary pollution we show that the impact of green lobbying on environmental policy outcomes depends crucially on the prevailing trade regime cooperative or non cooperative on whether environmental agencies act in a unilateral or coordinated manner and on the size of the emission leakages and transboundary spillovers under free trade a unilateral increase in pollution taxes reduces domestic emissions at the cost of increased foreign emissions in this case if the emission leakages and the associated transboundary spillovers are large enough green lobbying can create a bias towards lower pollution taxes

a new approach to computing hedonic equilibria and investigating the properties of locational sorting models abstract this paper outlines a new way to solve the traditional housing market assignment problem and uses it to investigate the properties of hedonic equilibria our approach to computing equilibria is based on rosen s 1974 bid function it has four desirable features i convergence implies a hedonic equilibrium ii convergence is guaranteed if a hedonic equilibrium exists iii it can solve for a new equilibrium following a shock to the market and iv if multiple equilibria exist it can identify them the algorithm is applied to micro data from san joaquin county california where the choice of a home provides access to public schools in particular school districts first we calibrate the algorithm to approximately reproduce actual housing prices in san joaquin county as a hedonic equilibrium then we introduce a policy that improves school quality in selected school districts we find that there are several possibilities for the new equilibrium for each of these potential equilibria we compare the marginal willingness to pay for school quality with the rate at which the improvement is capitalized into property values the resulting capitalization rates differ substantially from marginal willingness to pay

cleaning up while cleaning up pollution abatement interest groups and contingent trade policies this paper analyzes the political economy of environmental policy formation in a trading economy with established rules for administered protection we argue that the social costs associated with the adoption of an inefficient environmental regime are likely to be compounded by induced restrictions on trade when the effected industries are import competing the preferences of interest groups for alternative environmental regimes tend to be linked to the legal institutional setting in which trade policy is conducted under existing rules and practices in the area of administered protection there is reason to believe that interest group preferences for an inefficient approach to pollution control will be strengthened because the adoption of such a regime is more likely to lead to a concomitant increase in trade barriers

the political economy linkage between trade liberalization and domestic environmental regulations this paper considers the political economy linkage between trade liberalization and domestic environmental regulations in a duopolistic product market we investigate the environmental consequences and welfare implications of a home country s unilateral tariff reduction on a polluting good in a framework where the domestic environmental tax is subject to the influence of the home firm we find that a tariff reduction on a good producing a consumption type externality will improve the home country s environmental quality moreover we find that the home country s tariff reduction will unambiguously enhance the home country s welfare and it will damage the foreign firm s profits and thus the foreign country s welfare provided that the weight that the home government attaches to its social welfare is sufficiently small this result also suggests the possibility that a unilateral tariff reduction will achieve a pareto improvement

interest groups trade liberalization and environmental standards in considering a country that imposes a minimum standard on an imported polluting good which generates negative consumption externalities we construct a common agency model in which a domestic environmental group and a foreign industrial lobby can influence the formation of the minimum standard by providing political contributions to the government this paper investigates the effects of trade liberalization on the political equilibrium environmental standard the pattern of trade environmental disutility and social welfare we find that trade liberalization tightens the minimum standard decreases imports of the polluting good and reduces environmental disutilities the importing country s social welfare however does not necessarily increase with trade liberalization the weaker the environmental group s lobbying efficiency or the stronger the foreign firm s lobbying efficiency the more likely it is that trade liberalization will enhance the importing country s welfare