Trade, Technology, and the Environment: Does Access to Technology Promote Environmental Regulation?
By David Popp and Mary Lovely, Syracuse University
Presented by David Popp
Wednesday, November 17, 12.30-2 pm
Focusing on regulation of coal-fired power plants, we examine how technological innovation by early adopters influences the timing of new environmental regulation in non-innovating countries. We build a general equilibrium model of an open economy to identify the political-economy determinants of regulation. With a newly-created data set of SO2 and NOX regulations for coal-fired power plants and a patent-based measure of the technology frontier, we estimate the determinants of environmental regulation diffusion. Our findings support the hypothesis that international economic integration eases access to environmentally friendly technologies and leads to earlier adoption, ceteris paribus, of regulation in non-innovating countries. However, we also find evidence that domestic trade protection promotes earlier adoption by allowing shifts of regulatory costs to domestic consumers. Furthermore, international market power permits large countries to shift costs to foreign consumers. Other political economy factors, such as the quality of domestic coal, are also important determinants.
David Popp is Associate Professor of Public Administration at the Maxwell School of Citizenship and Public Affairs at Syracuse University, where he is also a Senior Research Associate in the Center for Policy Research. Much of his research focuses on links between environmental policy and innovation, with a particular interest in how environmental and energy policies shape the development of new technologies relevant for combating climate change. He has published widely, and served as consultant for numerous institutions on environmental issues. Popp received a B.A. in Political Economy from Williams College in 1992, and a Ph.D. in Economics from Yale University in 1997.