stock returns implied volatility innovations and the asymmetric volatility phenomenon we study the dynamic relation between daily stock retums and daily innovations in optionderived implied volatilities by simultaneously analyzing innovations in index and firmlevel implied volatilities we distinguish between innovations in systematic and idiosyncratic volatility in an effort to better understand the asymmetric volatility phenomenon our results indicate that the relation between stock retums and innovations in systematic volatility idiosyncratic volatility is substantially negative near zero these results suggest that asymmetric volatility is primarily attributed to systematic market wide factors rather than aggregated firm level effects we also present evidence that supports our assumption that innovations in implied volatility are good proxies for innovations in expected stocic volatility

the environment and welfare implications of trade and tax policy developing countries with comparative advantage in dirty industries face the risk of environmental degradation unless appropriate policies are implemented using applied general equilibrium analysis we examine how trade influences the environment and assess the welfare and environmental implications of alternative pollution abatement policies for indonesia our results indicate that unilateral trade liberalization by indonesia would increase the ratio of emission levels to real output for almost all major pollution categories more importantly when tariff removal is combined with a cost effective tax policy the twin objectives of welfare enhancement and environmental quality improvement appear to be feasible this sheds new and positive light on the role of trade in sustainable development

examining the global environmental impact of regional consumption activities part 2 review of input output models for the assessment of environmental impacts embodied in trade this paper offers a detailed review of recently described single and multi region input output models used to assess environmental impacts of internationally traded goods and services it is the second part of a two part contribution in part 1 turner k lenzen m wiedmann t and barrett j in press examining the global environmental impact of regional consumption activities part 1 a technical note on combining input output and ecological footprint analysis ecological economics we describe how to enumerate the resource and pollution content of inter regional and inter national trade flows with the aim to illustrate an ideal accounting and modelling framework for the estimation of ecological footprints a large number of such environment economic models have been described but only in the last few years models have emerged that use a more sophisticated multi region multi sector input output framework this has been made possible through improvements in data availability and quality as well as computability we identify six major models that employ multi sector multi region input output analysis in order to calculate environmental impacts embodied in international trade results from the reviewed studies demonstrate that it is important to explicitly consider the production recipe land and energy use as well as emissions in a multi region multi sector and multi directional trade model with global coverage and detailed sector disaggregation only then reliable figures for indicators of impacts embodied in trade such as the ecological footprint can be derived

asymmetric volatility spillovers between crude oil and international financial markets abstract in this paper we examine asymmetric volatility spillovers between oil and international stock markets in a vector autoregression framework using a directed acyclic graph dag technique we provide evidence that bad total volatility spillovers dominate the system and change over time suggesting that a pessimistic mood and uninformed traders who tend to increase volatility dominate in markets positive spillovers of oil markets dominated from 2006 to mid 2009 but reversed after mid 2009 moreover the spillovers from good volatilities in oil markets to bad volatilities in global stock markets were significantly positive during the economic recovery period the recent important economic and political events have influenced asymmetries in volatility spillovers

explaining and forecasting bond risk premiums in examining the risk premiums for u s and german 10 year government bond yields the authors found that the decline in bond risk premiums since the 1980s is associated with a decrease in global output variability and an increase in the power of 10 year government bonds to diversify portfolios

liquidity and autocorrelations in individual stock returns this paper documents a strong relationship between short run reversals and stock illiquidity even after controlling for trading volume the largest reversals and the potential contrarian trading strategy profits occur in high turnover low liquidity stocks as the price pressures caused by non informational demands for immediacy are accommodated however the contrarian trading strategy profits are smaller than the likely transactions costs this lack of profitability and the fact that the overall findings are consistent with rational equilibrium paradigms suggest that the violation of the efficient market hypothesis due to short term reversals is not so egregious after all asset prices should follow a martingale process over short horizons as systematic short run changes in fundamental values should be negligible in an efficient market with unpredictable information arrival however lehmann 1990 and jegadeesh 1990 show that contrarian strategies that exploit the short run return reversals in individual stocks generate abnormal returns of about 1 7 per week and 2 5 per month respectively subsequently ball kothari and wasley 1995 and conrad gultekin and kaul 1997 suggest that much of such reversal profitability is within the bid ask bounce theoretically the potential role of liquidity in explaining the high abnormal payoffs to short run contrarian strategies is implied by the rational equilibrium framework of campbell grossman and wang 1993 henceforth cgw in the cgw model non informational trading causes price movements that when absorbed by liquidity suppliers cause prices to revert such non informed trading is accompanied by high trading volume whereas informed trading is accompanied by little trading volume thus price changes accompanied by high low trading volume should should not revert empirically conrad hameed and niden 1994 henceforth chn find that reversal profitability increases with trading

the cross country implications of alternative climate policies abstract because of worldwide growing concerns about global climate change great interest has been expressed in the potential of alternative climate policies to reduce global carbon emissions in this paper we compare cross country implications of alternative climate policies including unilateral and multilateral climate policies our main findings are as follows firstly there are large differences in cross country effects of alternative unilateral climate policies when the same given carbon emission reductions are achieved in each abating country respectively meanwhile cross border externalities undermine efficiency of unilateral climate policies secondly there are significant differences in cross country implications of alternative multilateral climate policies when the same global emission reductions are allocated in several different ways among abating countries thirdly it is difficult to reach a stable global climate treaty since any abating country has the incentive to argue for small carbon emission reductions finally multilateral climate policies can reduce the negative impacts of cross border externalities but cannot cure all cross border externalities looking ahead it will be a great policy challenge for the world to reduce carbon emissions in a cost effective way

environmental kuznets curve hypothesis in pakistan cointegration and granger causality abstract the paper is an effort to fill the gap in the energy literature with a comprehensive country study of pakistan we investigate the relationship between co2 emissions energy consumption economic growth and trade openness in pakistan over the period of 1971 2009 bounds test for cointegration and granger causality approach are employed for the empirical analysis the result suggests that there exists a long run relationship among the variables and the environmental kuznets curve ekc hypothesis is supported the significant existence of ekc shows the country s effort to condense co2 emissions and indicates certain achievement of controlling environmental degradation in pakistan furthermore we find a one way causal relationship running from economic growth to co2 emissions energy consumption increases co2 emissions both in the short and long runs trade openness reduces co2 emissions in the long run but it is insignificant in the short run in addition the change of co2 emissions from short run to the long span of time is corrected by about 10 yearly

modelling the relationship between future energy intraday volatility and trading volume with wavelet abstractalthough the energy and stock markets are both characterized by volatility and liquidity and there has been substantial research to explore the relationship between volatility and trading volume tv in stock markets few researchers have investigated this relationship in energy markets moreover studies that have explored this association within energy markets did not describe its nature or impetus to redress this oversight we investigate this relationship using intraday data from the oil and gas markets the most liquid energy markets in the world in this way the current article extends the previous studies through the use of a frequency approach to propose an original analysis of the relationship between volume and volatility more specifically we employ a continuous wavelet transform to identify the lead lag phase between volatility and volume this framework supplants usual time series modelling as it uses a measure of coherence for different frequencies and time scales to capture fu

second best carbon taxation in the global economy the green paradox and carbon leakage revisited acceleration of global warming resulting from a future carbon tax is large if the price elasticities of oil demand are large and that of oil supply is small the fall in the world interest rate weakens this weak green paradox effect especially if intertemporal substitution is weak still social damages from greenhouse gases drop if the fall in oil supply and cumulative emissions is strong enough if the current carbon tax is set too low the second best future carbon tax is set below the first best too to mitigate adverse green paradox effects unilateral second best optimal carbon taxes exceed the first best taxes due to an import tariff component the intertemporal terms of trade effects of the future carbon tax increase current and future tariffs and those of the current tax lower the current tariff finally carbon leakage and globally altruistic and unilateral second best optimal carbon taxes if non kyoto oil importers price carbon too low are analysed in a three country model of the global economy

global trading versus linking architectures for international emissions trading abstract international emissions trading is widely seen as an indispensable policy pillar of climate change mitigation stern n 2007 the economics of climate change the stern review cambridge university press new york this article analyzes five different types of trading architectures classified into two top down unfccc driven and three bottom up driven by individual countries or regions approaches the two types of approaches are characterized by a trade off between environmental effectiveness and political feasibility respectively whereas their relative cost effectiveness depends on implementation details bottom up architectures constitute imperfect substitutes for top down architectures in terms of environmental effectiveness and thus remain mere fallback options however especially the formal linking architecture can act as complement in terms of cost effectiveness

absentee ownership of immobile factors and environmental policies in a federation this paper studies the effects of absentee ownership of immobile factors on environmental policy of a jurisdiction in a federation an increase in emissions in a jurisdiction increases factor incomes but part of the increased factor incomes goes to absentee owners while only the residents of the jurisdiction bear the full disutility in addition the increase in emissions in a jurisdiction attracts capital and decreases capital in other jurisdictions reducing the incomes that the residents of the jurisdiction earn from owning immobile factors in other jurisdictions absentee ownership thus reduces the marginal benefit of an increase in emissions while it leaves the marginal cost unaffected from the jurisdiction s perspective as a consequence absentee ownership makes environmental policy of a jurisdiction too stringent relative to the efficient level the paper also considers the effects of absentee ownership on environmental policy when goods trade is allowed

environmental management policy under international carbon leakage this article studies environmental management policy when two fossil fuel consuming countries noncooperatively regulate greenhouse gas emissions through emission taxes or quotas the presence of carbon leakage caused by fuel price changes affects the tax quota equivalence we explore each country s incentive to choose a policy instrument in a two stage policy choice game and find subgame perfect nash equilibria this sheds new light on the questions of which policy instrument is more stringent and of why adopted instruments could be different among countries in particular our result suggests a reason why developing countries tend to employ emission taxes whereas developed countries tend to adopt quotas

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

free riding carbon treaties and trade wars the role of domestic environmental policies this paper uses a calibrated general equilibrium model of north south trade with carbon emissions to explore the strategic open economy implications of price and quantity based instruments for co2 emission reduction we compute non cooperative environmental and trade policy equilibria and nash bargaining outcomes in environmental policies with side payments of cash results show that quotas can lead to higher internalization levels in a non cooperative zero tariff equilibrium in comparison with emission fees if tariffs are also chosen non cooperatively the form of policy instrument used affects equilibrium tariffs with quotas leading to lower trade barriers particularly under a regional carbon treaty

immiserizing investment from abroad the singer prebisch thesis reconsidered the present paper lends new analytical support to the controversial singer prebisch thesis according to this well known thesis less developed countries ldcs suffer a welfare loss from secular decline in their international terms of trade for primary product exports the standard theoretical criticism of the thesis makes two basic arguments both relating to the impact of economic expansion 2 first there is no well established presumption that the terms of trade for primary products will indeed deteriorate in a growing world economy second if domestic economic expansion does happen to worsen the terms of trade for ldcs economic welfare of these countries still need not deteriorate except under bhagwati s 1958 well known conditions for immiserizing growth thus the traditional critique sees the singer prebisch thesis as an unconvincing allegation about the relationship between growth and welfare via the terms of trade the following discussion suggests an alternative more favorable interpretation of the thesis this reinterpretation focuses upon the process of foreign investment4 rather than economic growth as the essential reason for adverse changes in the terms of trade and level of welfare for ldcs exporting primary products such a focus appears to be fully consistent with the analysis of singer 19501 5 whose main

unilateral emission cuts and carbon leakages in a dynamic north south trade model the effects of a unilateral cut in emissions are analyzed in a dynamic two country model two intermediate goods are produced one of which uses the fossil fuel these inputs are traded and combine to produce a final good the effect of a cut in fossil fuel use by a bloc e g annexure 1 countries in the kyoto protocol depends on whether the fuel is priced at marginal cost or above in the latter case a green paradox may appear the paper s contribution lies in analyzing the dynamics and trade implications of the unilateral action

the triple inefficiency of uncoordinated environmental policies when pollution is transboundary and there is international trade a domestic inefficiency may arise in addition to the well known inefficiencies at the international level more precisely there will be a nash equilibrium in which each country chooses a policy that gives it lower welfare than would otherwise be possible given the emission levels of all countries however there will also be a nash equilibrium in which each country chooses tradable emission quotas as its policy instrument to achieve its desired level of emissions in this nash equilibrium welfare in each country is maximised given the emission levels of all countries

a cost benefit analysis of slowing climate change there are many conflicting views regarding the true dimensions of the climate change problem often these viewpoints are based on different estimates of key parameters with little indication as to why parameter estimates vary so much and which ones might be the more reliable the prospects for a co ordinated strategy to tackle climate change appear dim little consensus has emerged for example regarding the costs of abating carbon emissions some take the view that considerable improvements in energy efficiency are available at negative cost by setting minimum efficiency standards for vehicles and domestic appliances e g mills et al 1991 others regard the macroeconomic costs of even small reductions in carbon emissions as substantial manne and richels 1993 in the judgement of other researchers a proportion of carbon emissions arise purely as a result of institutional failings either at a regional level in the subsidies paid to fossil fuel energy producers in the erroneous belief that this promotes economic growth shah and larsen 1994 in failure to deal with air pollution glomsrod et al 1992 and vehicle congestion in urban areas hughes 1994 or at a global level in failing to make appropriate transfers to those countries whose forests contain rich biodiversity which we would wish to preserve pearce 1991

international trade and the environment policy reform in a polluted small open economy abstract this paper investigates sufficient conditions for welfare improving policy reforms in a small open economy facing many trade and pollution distortions we investigate and compare reform in tax regimes quota regimes and mixed regimes where some pollutants are regulated with taxes and others with quotas it is also shown that the welfare benefits of reforming pollution policy are greater in an economy with international factor mobility than in an economy not subject to such mobility

the determinants of asymmetric volatility volatility in equity markets is asymmetric contemporaneous return and conditional return volatility are negatively correlated in this article i develop an asymmetric volatility model where dividend growth and dividend volatility are the two state variables of the economy the model allows both the leverage effect and the volatility feedback effect the two popular explanations of asymmetry the model is estimated by the simulated method of moments i find that both the leverage effect and volatility feedback are important determinants of asymmetric volatility and volatility feedback is significant both statistically and economically the relationship between stock price and its volatility has long interested financial researchers empirically returns and conditional variance of next period s returns are negatively correlated that is negative positive returns are generally associated with upward downward revisions of the conditional volatility this empirical phenomenon is often referred to as asymmetric volatility in the literature see engle and ng 1993 zakoian 1994 and wu and xiao 1999 the presence of asymmetric volatility is most apparent during stock market crashes when a large decline in stock price is associated with a significant increase in market volatility formal econometric models have been developed by researchers to capture asymmetric volatility for example asymmetric arch models of nelson 1991 and glosten jagannathan and runkle 1993 have been found to significantly outperform their counterparts that do not accommodate the asymmetry moreover continuous time stochastic volatility models generally produce estimates of a negative correlation between return and return volatility bakshi cao and chen 1997 and bates 1997 for a review of the literature on asymmetric volatility see bekaert

the dynamic impact of unilateral environmental policies this paper builds a two country two sector polluting nonpolluting trade model with directed technical change examining whether unilateral environmental policies can ensure sustainable growth the emission rate of the polluting sector depends on its relative use of a clean and a dirty input a unilateral policy combining clean research subsidies and a trade tax can ensure sustainable growth while unilateral carbon taxes alone increase innovation in the polluting sector abroad and generally cannot ensure sustainable growth relative to autarky and exogenous technical change respectively trade and directed technical change accelerate environmental degradation either under laissez faire or with unilateral carbon taxes yet both help reduce environmental degradation under the appropriate unilateral policy i characterize the optimal unilateral policy analytically and numerically using calibrated simulations knowledge spillovers have the potential to reduce the otherwise large welfare costs of restricting policy to onecountry

optimal containment and policy differentiation under unilateral climate policy without a broad international agreement climate policy is less effective due to carbon leakage we investigate whether this negative effect can be addressed by partially containing the policy s effects to intermediate goods sectors such as electricity or transportation services we use a three sector model to study a policy that taxes emissions caused by intermediate goods production while subsidizing the intermediate good we characterize the optimal containment policy for combating carbon leakage and show that it complements the concept of policy differentiation

modeling microstructure price dynamics with symmetric hawkes and diffusion model using ultra high frequency stock data this study examines the theoretical and empirical perspectives of the symmetric hawkes model of the price tick structure combined with the maximum likelihood estimation the model provides a proper method of volatility estimation specialized in ultra high frequency analysis empirical studies based on the model using the ultra high frequency data of stocks in the s p 500 are performed the performance of the volatility measure intraday estimation and the dynamics of the parameters are discussed a new approach of diffusion analogy to the symmetric hawkes model is proposed with the distributional properties very close to the hawkes model as a diffusion process the model provides more analytical simplicity when computing the variance formula incorporating skewness and examining the probabilistic property an estimation of the diffusion model is performed using the simulated maximum likelihood method and shows similar patterns to the hawkes model

analyzing the effectiveness of international environmental policies the case of the kyoto protocol we study the effectiveness of emission targets under the kyoto protocol with respect to reducing co2 emissions using country level and us state level panel data and employing the synthetic control method we find very little evidence for an emission reduction effect for the major emitters among the annex b countries with binding emission targets more generally we also show that evaluating the effectiveness of international environmental policies at the country level comes with a number of empirical challenges that may invalidate findings based on more traditional panel data approaches

emissions leakage environmental policy and trade frictions abstract we develop a two good general equilibrium model of a small open economy to decompose the effect of a country s unilateral strengthening of environmental policy on pollution emissions in the rest of the world known as emissions leakage we show analytically and numerically that the level of emissions leakage depends on the level of trade friction in the service sector in the model production in the manufacturing sector is associated with pollution emissions and production in the service sector is clean in a special case with free trade in manufacturing and no trade in services no leakage occurs allowing for trade in services we solve for the relationship between trade frictions in the service sector and leakage at lower levels of service sector s trade friction leakage from a small strengthening of environmental regulation decreases increases if services are imported exported finally we simulate the model calibrating the to the canadian economy to compare these effects relative sizes over a range of plausible parameter values leakage is about 18 lower when using trade friction levels estimated from the literature rather than assuming no trade friction in services

welfare ranking of environmental policies in the presence of capital mobility and cross border pollution we construct a model of two regions with cross border pollution and with inter regional regional capital mobility rcm or international international capital mobility icm capital mobility each region uses emission taxes or intra regionally or inter regionally tradable emission permits to reduce pollution we show that the non cooperative settings of all three instruments are always inefficient relative to their cooperative settings when regions are symmetric then i with rcm the non cooperative setting of intra regionally tradable emissions permits is welfare superior to that of the other two instruments ii with icm the non cooperative settings of intra regionally tradable emission permits and of emission taxes are equivalent and superior to that of inter regionally tradable emission permits and iii with icm the three instruments are equivalent only when cross border pollution is perfect

double limit pricing abstract we study oil extraction by a monopolist who faces demand from a climate aware and a climate ignorant region a renewable perfect substitute for oil is available at constant unit cost the climate aware region uses a carbon tax and a renewables subsidy as policy instruments due to heterogeneity in climate policies between regions the oil price path possibly contains two limit pricing phases we specify conditions under which a tightening of climate policies results in lower initial carbon emissions a renewables subsidy and a carbon tax effectively force the monopolist to sell more oil to the climate ignorant region during the stage when demand from the climate aware region has already vanished we calibrate the model and numerically investigate climate damage and welfare effects of the policies of the climate aware region we find that both the carbon tax and a renewables subsidy lower climate damage even though cumulative emissions are fixed

emissions trading of global and local pollutants pollution havens and free riding abstract in the presence of local sulfur and global carbon pollutants we examine the pollution haven hypothesis and free riding behavior under domestic emissions trading poorer southern countries become pollution havens when free trade opens up whenever sulfur damage functions are linear or when sulfur levels in equilibrium are not higher in the south with global trading of carbon permits the pollution haven effect emerges in equilibrium whenever the convex sulfur damage functions are nonlinear countries that do not participate in a global protocol designed to reduce carbon emissions enjoy double benefits stemming from free riding and cleaner local environments

opec s response to international climate agreements this paper studies a game between a group of countries that have agreed to participate in an international climate agreement the signatories and opec the purpose of the signatories is to design carbon taxes that maximize their total net income given a goal on global carbon emissions as a response to the climate agreement opec imposes an oil tax on its member states that maximizes opec s profits within a numerical model we find the subgame perfect equilibrium of a game in which each player chooses when to fix his decision variables it is shown that in equilibrium the group of signatories chooses to be the leader and opec chooses to be the follower it is demonstrated however that for both agents the order of move is of minor numerical importance hence the players have limited incentives for strategic behaviour

an information theoretic analysis of stock returns volatility and trading volumes information theory is used to examine the dynamic relationships between stock returns volatility and trading volumes for s p500 stocks this provides an alternative approach to traditional granger causality tests when dealing with nonlinear relationships the article highlights the dominant role played by trading volumes in all of these relationships even in the return volatility relation and finds evidence of a market level feedback effect from index returns to the return volatility relation at the stock level the article also produces a number of stylized facts from an information theoretic perspective

how does the informed trading impact bitcoin returns and volatility this study employed an augmented ar gjrgarch model that incorporates an intraday based buy sell order size imbalance measure to explore how informed trading behaviour activity impacted bitcoin retu

trade openness carbon emissions nexus the importance of turning points of trade openness for country panels abstract this paper explores the relationship between trade openness and co 2 emissions by incorporating economic growth as an additional and potential determinant of this relationship for three groups of 105 high middle and low income countries we apply the pedroni 1999 and westerlund 2007 panel cointegration tests and find that the three variables are cointegrated in the long run trade openness impedes environmental quality for the global high income middle and low income panels but the impact varies in these diverse groups of countries the panel vecm causality results highlight a feedback effect between trade openness and carbon emissions at the global level and the middle income countries but trade openness granger causes co 2 emissions for the high income and low income countries policy implications are also provided

volume and autocovariances in short horizon individual security returns this article tests for the relations between trading volume and subsequent returns patterns in individual securities short horizon returns that are suggested by such articles as blume easley and o hara 1994 and campbell grossman and wang 1993 using a variant of lehmann s 1990 contrarian trading strategy we find strong evidence of a relation between trading activity and subsequent autocovariances in weekly returns specifically high transaction securities experience price reversals while the returns of low transactions securities are positively autocovarying overall information on trading activity appears to be an important predictor of the returns of individual securities

asymmetric volatility in cryptocurrencies abstract this article analyzes asymmetric volatility effects for the 20 largest cryptocurrencies and reports a very different asymmetry compared to equity markets positive shocks increase the volatility by more than negative shocks we explain this atypical effect for financial assets with trading activity of uninformed noise traders for positive shocks and trading activity of informed traders for negative shocks the findings are consistent with fear of missing out fomo of uninformed investors and the existence of pump and dump schemes

adaptation and mitigation in global pollution problems economic impacts of productivity sensitivity and adaptive capacity this paper studies the influence of productivity pollution sensitivity and adaptive capacity on optimal mitigation and adaptation in a two country global pollution model we investigate the effects of changes of these parameters on the allocation of emissions adaptation expenditures and welfare in our analysis we distinguish between cooperative and non cooperative behavior our findings imply that unilateral improvements in productivity and adaptive capacity have strategic significance and do not necessarily lead to mutual welfare improvements they raise the emissions not only in the country where the technological improvement takes place but also globally an improvement in global welfare is guaranteed only under cooperative behavior with respect to emission and adaptation choices

the impact of trades on daily volatility this article proposes a trading based explanation for the asymmetric effect in daily volatility of individual stock returns previous studies propose two major hypotheses for this phenomenon leverage effect and time varying expected returns however leverage has no impact on asymmetric volatility at the daily frequency and moreover we observe asymmetric volatility for stocks with no leverage also expected returns may vary with the business cycle that is at a lower than daily frequency trading activity of contrarian and herding investors has a robust effect on the relationship between daily volatility and lagged return consistent with the predictions of the rational expectation models the non informational liquidity driven herding trades increase volatility following stock price declines and the informed contrarian trades reduce volatility following stock price increases the results are robust to different measures of volatility and trading activity jel c30 g11 g12 stock return volatility is fundamental to finance contingent claims pricing risk management asset allocation and market efficiency tests use volatility as a basic building block consequently volatility has been widely studied along several dimensions volatility clustering in financial data has been well documented and extensively modeled by the autoregressive conditional heteroskedasticity arch of engle 1982 and the generalized arch extension of bollerslev 1986 1 shiller 1981 leroy and porter 1981 roll 1984 1988 french and roll 1986 and cutler poterba and summers 1989 have all documented a significant amount of volatility that cannot be explained by changes in fundamentals and thus may be attributable to mispricing schwert 1989 has studied the variation in stock market volatility over time and has analyzed the

greenhouse gas emission controls and firm locations in north south trade this paper studies greenhouse gas emission ghg controls in the presence of international carbon leakage through international firm relocation in a new economic geography model with two countries north and south only north sets a target for ghg emissions we compare the consequences of emission quotas and emission taxes under trade liberalization on location of two manufacturing sectors with different emission intensities and degrees of carbon leakage with low trade costs further trade liberalization increases global emissions by facilitating carbon leakage regulation by quotas leads to spatial sorting resulting in less carbon leakage and less global emissions than regulation by taxes

nonpoint source pollution taxes and excessive tax burden if a regulator is unable to measure firms individual emissions an ambient tax can be used to achieve the socially desired level of pollution with this tax each firm pays a unit tax on aggregate emissions in order for the tax to be effective firms must recognize that their decisions affect aggregate emissions when firms behave strategically with respect to the tax setting regulator under plausible circumstances their tax burden is lower under an ambient tax relative to the tax which charges firms on the basis of individual emissions firms may prefer the case where the regulator is unable to observe individual firm emissions even if this asymmetric information causes the regulator to tax each firm on the basis of aggregate emissions

transactions volume and volatility we show that the positive volatility volume relation documented by numerous researchers actually reflects the positive relation between volatility and the number of transactions thus it is the occurrence of transactions per se and not their size that generates volatility trade size has no information beyond that contained in the frequency of transactions our results suggest that theoretical research needs to entertain scenarios in which 1 both the frequency and size of trades are endogenously determined yet 2 the size of trades has no information content beyond that contained in the number of transactions article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

cross border externalities and trade liberalization the strategic control of pollution the authors examine international trade in a commodity whose production creates a negative externality for the importing country and they consider the nations strategic policy choices when they can restrict trade and when they are bound by a free trade agreement when pollution abatement technology is available the exporting country induces its adoption despite national indifference to the externality in order to reduce the tariff in a free trade agreement environmental policy is used to exploit monopoly power in trade an alternative policy instrument a process standard is introduced national competition in controlling emissions leads to very restrictive antipollution measures we examine international trade in a commodity whose production creates a negative externality for the importing country and we consider the nations strategic policy choices when they can restrict trade and when they are bound by a free trade agreement when pollution abatement technology is available the exporting country induces its adoption despite national indifference to the externality in order to reduce the tariff in a free trade agreement environmental policy is used to exploit monopoly power in trade an alternative policy instrument a process standard is introduced national competition in controlling emissions leads to very restrictive anti pollution measures

carbon leakage revisited unilateral climate policy with directed technical change using a stylized theoretical model we argue that current economic analyses of climate policy tend to over estimate the degree of carbon leakage as they abstract from the effects of induced technological change we analyse carbon leakage in a two country model with directed technical change where only one of the countries enforces an exogenous cap on emissions climate policy induces changes in relative prices that cause carbon leakage through a terms of trade effect however these changes in relative prices also affect the incentives to innovate in different sectors this leads to a counterbalancing induced technology effect which always reduces carbon leakage we therefore conclude that the leakage rates reported in the literature may be too high as these estimates neglect the effect of price changes on the incentives to innovate

greenhouse gas emission controls in an open economy to examine how greenhouse gas emission controls affect a country s industrial and trade structures this article presents an open economy model that has both ricardian and heckscher ohlin features we specifically compare emission quotas emission taxes and emission standards the patterns of production and trade critically hinge on those policy tools it is shown that a domestic emission control may lead to carbon leakage and may not reduce the world emissions and that emission standards may work as a hidden production subsidy toward an emission intensive industry

unilateral co2 reductions and carbon leakage the consequences of international trade in oil and basic materials a recursively dynamic general equilibrium model featuring six world regions with trade in energy and non energy goods is used to simulate the period from 1990 through 2100 in 10 year intervals the simulations explore the effect of unilateral action by the oecd to curb global co2 emissions unilateral cuts create incentives for free riding by non participating regions so that global emissions are reduced by less than the amount that the oecd cuts back its regional emissions carbon leakage occurs through two channels first basic materials production increases in unconstrained regions resulting in increased carbon intensity of gdp second reductions in oecd oil imports cause the world oil price to fall leading to an increased energy intensity in the non participant regions in this paper we use a general equilibrium model to assess the extent to which these two mechanisms reduce the effectiveness of oecd reductions in curbing global co2 concentrations

factor movements and commodity trade as complements abstract several models are presented in which factor mobility leads to an increase in the volume of world trade the models share the common characteristic that the basis for trade is something other than differences in relative factor endowments these alternative bases for trade include returns to scale imperfect competition production and factor taxes and differences in production technology taken together the models suggest a more general idea the widely held notion that trade in goods and factors are substitutes is in fact a rather special result which is a general characteristic only of factor proportions models

international trade in carbon emission rights and basic materials general equilibrium calculations for 2020 restrictions on co emissions affect international trade and the pattern of comparative advantage this paper based on calculations with a static general equilibrium model suggests that international trade in carbon rights is a substitute for trade in energy intensive goods and thus international trading in carbon rights reduces sectoral effects of emission reductions in our model we surprisingly find that free riding by non signatory countries may not render unilateral action ineffective if the oecd unilaterally cuts global emissions by 5 per cent from 1990 levels by the year 2020 emissions by non oecd regions increase but offset less than 15 per cent of this cutback moreover carbon taxes depress international oil prices and create incentives for increased tradc in natural gas

can the terms of trade externality outweigh free riding the role of vertical linkages abstract this paper analyzes the impact of vertical linkages on the international effects of environmental policy with vertical linkages stricter environmental policy at home indirectly reduces pollution in the rest of the world this spillback effect can reinforce the free rider problem that arises under strategic interaction when pollution is transboundary a race to the bottom ensues despite the fact that vertical linkages make it easier for national regulators to export the costs of environmental policy via the terms of trade we also find that while trade liberalization can be good for the environment vertical linkages tend to increase global pollution

estimating quadratic variation using realized variance this paper looks at some recent work on estimating quadratic variation using realised variance rv that is sums of m squared returns this econometrics has been motivated by the advent of the common availability of high frequency financial return data when the underlying process is a semimartingale we recall the fundamental result that rv is a consistent as m estimator of quadratic variation qv we express concern that without additional assumptions it seems difficult to give any measure of uncertainty of the rv in this context the position dramatically changes when we work with a rather general sv model which is a special case of the semimartingale model then qv is integrated variance and we can derive the asymptotic distribution of the rv and its rate of convergence these results do not require us to specify a model for either the drift or volatility functions although we have to impose some weak regularity assumptions we illustrate the use of the limit theory on some exchange rate data and some stock data we show that even with large values of m the rv is sometimes a quite noisy estimator of integrated variance

risk inflation and the stock market most explanations for the decline in share values over the past two decades have focused on the concurrent increase in inflation this paper considers an alternative explanation a substantial increase in the riskiness of capital investments we show that the variance of firms real gross marginal return on capital has increased significantly increasing the relative riskiness of investors returns on equity and that this can explain a large part of the market decline we also assess the effects of increase in the mean and variance of the inflation rate and a decline in firms expected return on capital this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item

cojumps and asset allocation in international equity markets abstract this paper examines the patterns of intraday cojumps between international equity markets as well as their impact on international asset holdings and portfolio diversification benefits using intraday index based data for exchange traded funds as proxies for international equity markets we document evidence of significant cojumps with the intensity increasing during the global financial crisis of 2008 2009 the application of the hawkes process also shows that jumps propagate from the us and other developed markets to emerging markets correlated jumps are found to reduce diversification benefits and foreign asset holdings in minimum risk portfolios whereas idiosyncratic jumps increase the diversification benefits of international equity portfolios in contrast the impact of higher order moments induced by idiosyncratic and systematic jumps on the optimal composition of international portfolios is not significant

asymmetric tax policy responses in large economies with cross border pollution we build a model of cross border pollution between two large open economies one importing the polluting good and the other exporting it and derive their non cooperative trade and environmental tax policies we show among other things that 1 in response to a bilateral reduction in trade taxes by both countries the former country s optimal policy is to lower its nash emissions tax while the latter s is to raise it and 2 in response to an increase in emissions tax rates by both countries the former country s optimal reaction is to raise its nash import tariff while the latter s is to reduce its nash export tax that is in the present context freer trade leads the exporting country to adopt stricter while the importing country laxer environmental tax policies

carbon leakage the green paradox and perfect future markets policies of lowering carbon demand may aggravate instead of alleviate climate change green paradox in a two period three country general equilibrium model with finite endowment of fossil fuel one country enforces an emissions cap in the first or second periods when that cap is tightened the extent of carbon leakage depends on the interaction of various parameters and elasticities conditions for the green paradox are specified all determinants of carbon leakage resulting from tightening the first period cap work in the opposite direction when the second period cap is tightened tightening the second period cap does not necessarily lead to the green paradox

trading breaks and asymmetric information the option markets abstract we find that weekend holiday and overnight trading breaks generate excessive perceived risk in the option markets presumably due to asymmetric information which in turn encourages uninformed option traders to postpone trading this perceived risk subsides after two days accompanied by an increase in the option trading volume and the underlying index s actual price volatility these results shed light on the informational role of index options and suggest that the theoretical models results regarding information processing and price discovery in the presence of private information are not limited to single stocks but also apply to the market as a whole

market power and transferable property rights the appeal of using markets as a means of allocating scarce resources stems in large part from the assumption that a market will approximate the competitive ideal when competition is not a foregone conclusion the question naturally arises as to how a firm might manipulate the market to its own advantage this paper analyzes the issue of market power in the context of markets for transferable property rights first a model is developed that explains how a single firm with market power might exercise its influence this is followed by an examination of the model in the context of a particular policy problem the control of particulate sulfates in the los angeles region

order imbalance liquidity and market returns traditionally volume has provided the link between trading activity and returns we focus on a hitherto unexplored but intuitive measure of trading activity the aggregate daily order imbalance on the new york stock exchange signed order imbalances increase decrease following market declines rises which reveals that investors are contrarians on aggregate order imbalances in either direction either excess buy or sell orders reduce liquidity market wide returns are strongly affected by contemporaneous and lagged order imbalances market wide returns reverse themselves after high negative imbalance large negative return days the magnitude of this reversal is partially predictable from the level of the imbalance and return even after controlling for aggregate market volume and liquidity market returns are affected by order imbalance

a model of competitive stock trading volume a model of competitive stock trading is developed in which investors are heterogeneous in their information and private investment opportunities and rationally trade for both informational and noninformational motives i examine the link between the nature of heterogeneity among investors and the behavior of trading volume and its relation to price dynamics it is found that volume is positively correlated with absolute changes in prices and dividends i show that informational trading and noninformational trading lead to different dynamic relations between trading volume and stock returns

substitution between biofuels and fossil fuels is there a green paradox we show that i subsidies for renewable energy policies with the intention of encouraging substitution away from fossil fuels may accentuate climate change damages by hastening fossil fuel extraction and that ii the opposite result holds under some specified conditions we focus on the case of subsidies for renewable resources produced under increasing marginal costs and assume that both the renewable resources and the fossil fuels are currently in use such subsidies have a direct effect and an indirect effect working in opposite directions the direct effect is the reduction in demand for fossil fuels at any given price the indirect effect is the reduction in the current equilibrium price for fossil fuels which tends to increase the amount of fossil fuels demanded whether the sum of the two effects will actually result in an earlier or later date of exhaustion of the stock of fossil fuels depends on the curvature of the demand curve for energy and of the supply curve for the renewable substitute

the leverage effect puzzle disentangling sources of bias at high frequency the leverage effect refers to the generally negative correlation between an asset return and its changes of volatility a natural estimate consists in using the empirical correlation between the daily returns and the changes of daily volatility estimated from high frequency data the puzzle lies in the fact that such an intuitively natural estimate yields nearly zero correlation for most assets tested despite the many economic reasons for expecting the estimated correlation to be negative to better understand the sources of the puzzle we analyze the different asymptotic biases that are involved in high frequency estimation of the leverage effect including biases due to discretization errors to smoothing errors in estimating spot volatilities to estimation error and to market microstructure noise this decomposition enables us to propose novel bias correction methods for estimating the leverage effect

on the volatility volume relationship in energy futures markets using intraday data this paper investigates the relationship between trading volume and price volatility in the crude oil and natural gas futures markets when using high frequency data by regressing various realized volatility measures with without jumps on trading volume and trading frequency our results feature a contemporaneous and largely positive relationship furthermore we test whether the volatility volume relationship is symmetric for energy futures by considering positive and negative realized semivariances we show that i an asymm etric volatility volume relationship indeed exists ii trading volume and trading frequency significantly affect negative and positive realized semivariance and iii the information content of negative realized semivariance is higher than for positive realized semivariance

the co2 abatement game costs incentives and the enforceability of a sub global coalition abstract this paper studies the economic incentives and the institutional issues governing the outcomes of a short term climate change policy package guided by the united nations framework convention on climate change and the berlin mandate initiatives game theoretic tools and the global trade environment interface are explored within a 26 region 13 commodity computable general equilibrium framework to characterize the incentives of oecd regions to comply with a non binding agreement in a carbon abatement coalition the results showed that in the absence of side payments the achievement of such a coalition might require the design of suitable trade instruments

why are there large differences in performances when the same carbon emission reductions are achieved in different countries great interest has been in unilateral climate policies given present difficulty of establishing stable global coordinated agreements in this paper we investigate underlining factors explaining large differences in performances when the same carbon emission reductions are achieved in different abating countries to this end we develop a new multi country general equilibrium model incorporating six countries or world regions two goods six production inputs capital mobility energy mobility and international trade meanwhile we adopt two performance indicators with carbon leakage representing environmental efficiency and carbon emission abatement costs revealing cost effectiveness our findings are as follows firstly there are large differences in performances among these unilateral climate policies as evidenced by large differences in leakage rates and carbon emission abatement costs secondly the new global climate treaties to replace the kyoto protocol should be able to induce more carbon emission reductions in countries with low carbon emission reduction costs since such setting contributes to global cost savings finally developed countries have high carbon emission abatement costs compared with large developing countries china and india in this paper implying that there should be trade off mechanisms between efficiency and equity regarding how to allocate carbon emission reductions among countries

trade size order imbalance and the volatility volume relation abstract this paper examines the roles of the number of trades size of trades and order imbalance buyer versus seller initiated trades in explaining the volatility volume relation for a sample of nyse and nasdaq stocks our results reconfirm the significance of the size of trades beyond that of the number of trades in the volatility volume relation on both markets after controlling for the return impact of order imbalance the volatility volume relation becomes much weaker for nyse stocks the order imbalance in large trade size categories affects the return more than in smaller size categories for nasdaq stocks the largest return impact comes from the order imbalance in maximum sized small order execution system soes trades

carbon dioxide emissions and international trade at the turn of the millennium we present a new dataset of geographical production final embodied production and consumption based carbon dioxide emission inventories covering 78 regions and 55 sectors from 1997 to 2011 we extend previous work both in terms of time span and in bridging from geographical to embodied production and ultimately to consumption we analyse the recent evolution of emissions the development of carbon efficiency of the global economy and the role of international trade as the distribution of responsibility for emissions across countries is key to the adoption and implementation of international environmental agreements and regulations the final production and consumption based inventories developed here provide a valuable extension to more traditional geographical production based criteria

do demand curves for stocks slope down since september 1976 stocks newly included into the standard and poor s 500 index have earned a significant positive abnormal return at the announcement of the inclusion this return does not disappear for at least ten days after the inclusion the returns are positively related to measures of buying by index funds consistent with the hypothesis that demand curves for stocks slope down the returns are not related to s p s bond ratings which is inconsistent with a plausible version of the hypothesis that inclusion is a certification of the quality of the stock

does distribution matter efficiency equity and flexibility in greenhouse gas abatement this paper analyses banking and borrowing ofcarbon emission rights within the framework ofa simple integrated assessment model breaking the world economy in just two regionsit will be shown 1 increasing intertemporal flexibility in greenhouse gasabatement through banking and borrowing ofcarbon emission permits has a positive effecton welfare for regions with a poor endowment incarbon emission rights but negatively affectsrich endowed regions 2 intergenerationalfairness advocates intertemporal flexibility ingreenhouse gas abatement irrespectively of theinitial allocation of carbon rights 3 optimal carbon accumulation is not independentof the initial allocation of carbon rights different initial sharing rules clearlyinfluence the development of atmospheric carbonconcentration

effects of unilateral climate policy on terms of trade capital accumulation and welfare in a world economy we present a two good two country overlapping generations model where emissions arise from production and each country has a domestic emission permit system when one country unilaterally reduces her cap on emissions her output available for domestic and foreign consumption diminishes more than in the other country with unchanged consumption expenditure shares for both goods the domestic terms of trade improve while capital stocks decline in the reducing and less strongly in the non reducing country improving terms of trade in the reducing country and falling capital stocks lead in total to welfare losses in both countries however if the country which unilaterally reduces her emission permits is a net creditor to the world economy and the golden rule applies her own welfare loss remains below that of the non reducing country

flattening the carbon extraction path in unilateral cost effective action internalizing the global negative externality of carbon emissions requires the flattening of the extraction path of world fossil energy resources world carbon emissions we consider governments with sign unconstrained emission taxes at their disposal and seeking to prevent world emissions from exceeding some binding aggregate emission ceiling in the medium term such a ceiling policy can be carried out either in full cooperation or by a sub global climate coalition unilateral action has to cope with carbon leakage and high costs which makes a strong case for choosing a policy that implements the ceiling in a cost effective way in a two country two period general equilibrium model with a non renewable fossil energy resource we characterize the unilateral cost effective ceiling policy and compare it with its fully cooperative counterpart we show that with full cooperation there exists a cost effective ceiling policy in which only first period emissions are taxed at a rate that is uniform across countries in contrast the cost effective ceiling policy of a sub global climate coalition is characterized by emission regulation in both periods the share of the total stock of energy resources owned by the sub global climate coalition turns out to be a decisive determinant of the sign and magnitude of unilateral cost effective taxes

north south negotiations on emission reductions a bargaining approach this article models north south negotiations on emission reductions where the north provides side payments in exchange for the south s adoption of a more stringent emission standard we find that depending on where firms compete strong asymmetry among regions the two regions different valuations of side payments and climate change damage can produce self enforcing cooperative agreements moreover the south s optimal standard choice can be one of two polar cases i e either the cleanest or the dirtiest irrespective of the continuum of standards available the results above can also hold true when both parties bargain over the south s emission tax

does trade liberalization harm the environment a new test recent events such as the nafta and the completion of the uruguay round have raised concern over the impact of trade liberalization on the environment in particular it is believed that less stringent environmental standards in developing countries will give them a comparative advantage in pollutionintensive goods using single equation models existing empirical studies have found either no relationship between environment and trade flows or a positive relationship between trade liberalization and the environment this paper develops a simultaneous equations model to estimate this relationship directly incorporating the effects of openness on growth of income and of income growth on environmental damage a two good trade model with endogenous factor supply is estimated using pooled provincial data on chinese water pollution from 1987 1995 estimation of this model reveals that trade liberalization directly aggravates environmental damage via its influence on the terms of trade but indirectly mitigates it via its effect on income growth simulations suggest that trade reform during the period may have had a net beneficial impact on emissions growth

free trade and global warming a trade theory view of the kyoto protocol this paper demonstrates how three important results in environmental economics true under mild conditions in closed economies are false or need serious amendment in a world with international trade in goods since the three results we highlight have framed much of the ongoing discussion and research on the kyoto protocol our viewpoint from trade theory suggests a re examination may be in order specifically we demonstrate that in an open trading world but not in a closed economy setting 1 unilateral emission reductions by the rich north can create self interested emission reductions by the unconstrained poor south 2 simple rules for allocating emission reductions across countries such as uniform reductions may well be efficient even if international trade in emission permits is not allowed and 3 when international emission permit trade does occur it may make both participants in the trade worse off and increase global emissions

simulated likelihood estimation of diffusions with an application to exchange rate dynamics in incomplete markets abstract we present an econometric method for estimating the parameters of a diffusion model from discretely sampled data the estimator is transparent adaptive and inherits the asymptotic properties of the generally unattainable maximum likelihood estimator we use this method to estimate a new continuous time model of the joint dynamics of interest rates in two countries and the exchange rate between the two currencies the model allows financial markets to be incomplete and specifies the degree of incompleteness as a stochastic process our empirical results offer several new insights into the dynamics of exchange rates

pollution content tariffs environmental rent shifting and the control of cross border pollution this paper considers the optimal unilateral policy for a country that imports a good from a neighbouring country and is harmed by pollution generated during the production of that good if the foreign country has a variable abatement technology then home has an incentive to impose a tax on the pollution content of imports a pollution content tariff foreign regulation of pollution does not eliminate home s incentives to intervene but instead may create rent shifting opportunities by making the right to pollute a scarce asset foreign pollution quotas create rents that the home government can try to extract

heteroskedasticity in stock return data volume versus garch effects this paper provides empirical support for the notion that autoregressive conditional heterqskedasticity arch in daily stock return data reflects time dependence in the process generating information flow to the market daily trading volume used as a proxy for information arrival time is shown to have significant explanatory power regarding the variance of daily returns which is an implication of the assumption that daily returns are subordinated to intraday equilibrium returns furthermore arch effects tend to disappear when volume is included in the variance equation the autoregressive conditiqnal heteroskedasticity arch process of engle 1982 has been shown to provide a good fit for many financial return time series 1 arch imposes an autoregressive structure on conditional variance allqwing volatility shocks to persist over time this persistence captures the propensity of returns of like magnitude to clu ter in time and can explain the well documented nonnormality and nonstability of empirical asset return distributions see especially fama 1965 an appealing explanation for the presence of arch is based upon the hypothesis that daily returns are generated by a maiture of distributions in which the rate of daily information arrival is the stochastic mixing variable as suggested by diebold 1986 gallant hsieh and tauchen 1988 and stock 1987 1988 arch might capture the time series properties e g serial correlation of this mixing variable hqwever this linkage has not been broadly documented with the datia the objective of this study is to examine the validity of this explanation for daily stock returns the empirical strategy exploits the implication of the mixture model that the variance of daily price increments is heteroskedastic specifically positively related to the rate of daily information arrival using daily trading volume as a proxy for the mixing variable we show that for a sample of 20 common stocks arch effects vanish when volume is included as an explanatory variable in the conditional variance equation

do immigrant inflows lead to native outflows we use 1980 and 1990 census data for 119 larger metropolitan statistical areas to examine the effect of skill group specific immigrant inflows on the location decisions of natives in the same skill group and on the overall distribution of human capital to control for unobserved skill group specific demand factors our models include lagged mobility flows of natives over the 1970 80 period we also estimate instrumental variables models that use the fraction of mexican immigrants in 1970 to predict skill group specific relative immigrant inflows over the 1980s despite wide variation across cities in the size and relative skill composition of immigrant population changes we find no evidence of selective out migration by natives we conclude that immigrant inflows exert a direct effect on the relative skill composition of cities cities that have received relatively unskilled immigrant flows have experienced proportional rises in the size of their unskilled populations this abstract was borrowed from another version of this item

trading volume and serial correlation in stock returns this paper investigates the relationship between aggregate stock market trading volume and the serial correlation of daily stock returns for both stock indexes and individual large stocks the first order daily return autocorrelation tends to decline with volume the paper explains this phenomenon using a model in which risk averse market makers accommodate buying or selling pressure from liquidity or noninformational traders changing expected stock returns reward market makers for playing this role the model implies that a stock price decline on a high volume day is more likely than a stock price decline on a low volume day to be associated with an increase in the expected stock return

the effectiveness of incomplete and overlapping pollution regulation evidence from bans on phosphate in automatic dishwasher detergent abstract this paper examines the effectiveness of command and control policies in the presence of incomplete and overlapping regulations we study how recent bans on phosphate in household dishwasher detergent affect pollution loads to waterways costs at wastewater treatment facilities and consumer behavior we show that the effectiveness of the bans in reducing effluent depends critically on regulations at receiving treatment facilities as cost minimizers facilities with an emissions standard on phosphorus face no incentive to deviate from the standard we show that bans have weak effects on effluent especially in the most polluted waterways we also use an early isolated ban in spokane washington to study the effect of the bans on consumers we find that this ban shifted approximately 40 of dishwasher detergent sales from spokane to bordering counties until a state wide ban was implemented using these estimates we find that the welfare loss to consumers from recent bans is likely greater than the cost savings to treatment plants