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Market Effects of Environmental Regulation: Coal, Railroads, and the 1990 Clean Air Act, RAND Journal of Economics

Abstract

Many environmental regulations encourage the use of "clean" inputs. When the suppliers of such an input have market power, environmental regulation will affect not only the quantity of the input used but also its price. We investigate the effect of the Title IV emissions trading program for sulfur dioxide on the market for low-sulfur coal. We find that the two railroads transporting coal were able to price discriminate on the basis of environmental regulation and geographic location. Delivered prices rose for plants in the trading program relative to other plants, and by more at plants near a low-sulfur coal source.

Type

Article

Author(s)

Meghan Busse, Nathaniel O. Keohane

Date Published

2007

Citations

Busse, Meghan, and Nathaniel O. Keohane. 2007. Market Effects of Environmental Regulation: Coal, Railroads, and the 1990 Clean Air Act. RAND Journal of Economics. 38(4): 1159-1179.

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