Econ 8852 - Topics in IO: Environmental Economics

Prof. Richard Sweeney


This graduate course covers current topics in environmental economics, with a focus on regulating firms. After briefly reviewing the economic aim of environmental regulation, we’ll spend the bulk of the class reading recent (primarily empirical) papers on topics of policy interest. Our emphasis will be on papers with an IO or behavioral economics angle. A list of planned topics is provided below.

The required readings for each lecture are listed below. Additional, non-required readings for each topic are provided in the lecture notes. I will also try to maintain a public folder with relevant articles by topic in Paperpile.

Beyond the subject matter covered, a key goal of this course is to learn how to read an empirical paper. To that end, a cursory list of questions you should ask yourself when reading any paper is here. Approximately every other lecture I will ask you to prepare short slides on the required reading.

I’ll assume you’ve read the relevant chapters in Mas Collel, Whinston and Green or Varian.

For a thorough theoretical treatment, see The Theory of Environmental Policy. Baumol, W. J, and W. E Oates. Cambridge Univ Press, 1988.

For a more recent graduate text, with many useful worked examples, see A Course in Environmental Economics. Phaneuf, D. J, and Till Requate. Cambridge Univ Press, 2017.

Topics covered - Fall 2021


Slides / Markdown version (printer friendly)

Cropper, Maureen L., and Wallace E. Oates. 1992. “Environmental Economics: A Survey.” Journal of Economic Literature 30 (2): 675–740

Timmins, Christopher, and Wolfram Schlenker. 2009. “Reduced-Form Versus Structural Modeling in Environmental and Resource Economics.” Annual Review of Resource Economics 1 (1): 351–80


Slides / Markdown version (printer friendly)

Fowlie, Meredith. 2010. “Emissions Trading, Electricity Restructuring, and Investment in Pollution Abatement.” The American Economic Review 100 (3): 837–69

Incidence / Pass-through

Slides (.pdf)

Ganapati, Sharat, Joseph S. Shapiro, and Reed Walker. 2020. “Energy Cost Pass-Through in US Manufacturing: Estimates and Implications for Carbon Taxes.” AEJ: Applied

Muehlegger, Erich, and Richard L. Sweeney. 2021. “Pass-Through of Own and Rival Cost Shocks: Evidence from the U.S. Fracking Boom.” Working paper



Aldy, Gerarden and Sweeney. 2021. “Investment vs Output Subsidies.” Working paper

De Groote, Olivier, and Frank Verboven. 2019. “Subsidies and Time Discounting in New Technology Adoption: Evidence from Solar Photovoltaic Systems.” The American Economic Review 109 (6): 2137–72

Energy Efficiency

Slides / Markdown version

Allcott, Hunt, and Nathan Wozny. 2013. “Gasoline Prices, Fuel Economy, and the Energy Paradox.” The Review of Economics and Statistics 96 (5): 779–95

Allcott, Hunt, and Dmitry Taubinsky. 2015. “Evaluating Behaviorally Motivated Policy: Experimental Evidence from the Lightbulb Market.” The American Economic Review 105 (8): 2501–38

Allcott, Hunt, and Michael Greenstone. 02/2012. “Is There an Energy Efficiency Gap?” The Journal of Economic Perspectives 26 (1): 3–28


Slides (.pdf)

Duflo, Esther, Michael Greenstone, Rohini Pande and Nick Ryan, “The Value of Regulatory Discretion: Estimates From Environmental Inspections in India.” ECMA (2018)

Blundell, Wesley, Gautam Gowrisankaran, and Ashley Langer. “Escalation of Scrutiny: The Gains from Dynamic Enforcement of Environmental Regulations.” AER (2020)

Harrington, Winston, “Enforcement leverage when penalties are restricted.” JPubEcon, 1988

Housing Markets

Slides (.pdf)

Muehlenbachs, Lucija, Elisheba Spiller, and Christopher Timmins. 2015. “The Housing Market Impacts of Shale Gas Development.” The American Economic Review 105 (12): 3633–59

Kuminoff, Nicolai V., V. Kerry Smith, and Christopher Timmins. 2013. “The New Economics of Equilibrium Sorting and Policy Evaluation Using Housing Markets.” Journal of Economic Literature 51 (4): 1007–62.

Bayer, Patrick; McMillan, Robert; Murphy, Alvin; Timmins, Christopher. 2016 “A Dynamic Model of Demand for Houses and Neighborhoods.” Econometrica

Kuminoff, Nicolai V., and Jaren C. Pope. 2014. “Do ‘Capitalization Effects’ for Public Goods Reveal the Public’s Willingness to Pay?” International Economic Review 55 (4): 1227–50.


Acemoglu, Daron, Philippe Aghion, Leonardo Bursztyn, and David Hemous. 2012. “The Environment and Directed Technical Change.” The American Economic Review 102 (1): 131–66

Knittel, Christopher R. 2011. “Automobiles on Steroids: Product Attribute Trade-Offs and Technological Progress in the Automobile Sector.” The American Economic Review 101 (7): 3368–99