Testing the Theory of Trade Policy: Evidence from the Abrupt End of the Multifibre Arrangement

Quota restrictions on United States imports of apparel and textiles under the multifibre arrangement (MFA) ended abruptly in January 2005. This change in policy was large, predetermined, and fully anticipated, making it an ideal natural experiment for testing the theory of trade policy. We focus on simple and robust theory predictions about the effects of binding quotas, and also compute nonparametric estimates of the cost of the MFA. We find that prices of quota constrained categories from China fell by 38% in 2005, while prices in unconstrained categories from China and from other countries changed little. We also find substantial quality downgrading in imports from China in previously constrained categories, as predicted by theory. The annual cost of the MFA to U.S. consumers was about $90 per household.

Estimating the effects of regulation when treated and control firms compete: a new method with application to the EU ETS

This paper presents a method for estimating treatment effects of regulations when treated and control firms compete on the output market. We develop a GMM estimator that recovers reduced-form parameters consistent with a model of differentiated product markets with multi-plant firms, and use these estimates to evaluate counterfactual revenues and emissions. Our procedure recovers unbiased estimates of treatment effects in Monte Carlo experiments, while difference-in-differences estimators and other popular methods do not. In an application, we find that the European carbon market reduced emissions at regulated plants without undermining revenues of regulated firms, relative to an unregulated counterfactual

Estimating the effects of regulation when treated and control firms compete: a new method with application to the EU ETS

This paper presents a method for estimating treatment effects of regulations when treated and control firms compete on the output market. We develop a GMM estimator that recovers reduced-form parameters consistent with a model of differentiated product markets with multi-plant firms, and use these estimates to evaluate counterfactual revenues and emissions. Our procedure recovers unbiased estimates of treatment effects in Monte Carlo experiments, while difference-in-differences estimators and other popular methods do not. In an application, we find that the European carbon market reduced emissions at regulated plants without undermining revenues of regulated firms, relative to an unregulated counterfactual

Flying insect inspired vision for autonomous aerial robot maneuvers in near-earth environments

Proceedings of the 2004 IEEE International Conference on Robotics & Automation. Retrieved April 2006 from http://prism2.mem.drexel.edu/~paul/papers/greenOhBarrowsIcra2004.pdfNear-Earth environments are time consuming, labor intensive and possibly dangerous to safe guard. Accomplishing tasks like bomb detection, search-andrescue and reconnaissance with aerial robots could save resources. This paper describes the adoption of insect behavior and flight patterns to devolop a AtAV sensor suite. A prototype called CQAR: Closed Quarter Aerial Robot, which is capable of flying in and around buildings, through tunnels and in and out of caves will be used to validate the eficiency of such a method when equipped with optic flow microsensors

Essays on Technology and the Environment from an International Perspective

In this dissertation, I present three essays that consider the environmental consequences of technological change, from an international perspective. The first two chapters use firm-level production data to estimate the response of CO2 emission intensity to changes in competition in foreign markets. The first chapter estimates this response with respect to foreign demand shocks, i.e., a positive shock to exports. The second chapter exploits a specific liberalization episode to estimate the impact with respect to foreign competition shocks, i.e., a negative shock to exports. Both papers are co-authored with Helene Ollivier. The final chapter analyzes the decision to adopt genetically engineered seeds in different countries around the world, and the attendant impacts on supply and land-use. This last chapter is co-authored with David Zilberman and Steven Sexton and was previously published in Environment and Development Economics.The first chapter investigates the impact of exporting on the CO2 emission intensity of manufacturing firms in India. Recent papers have argued that export market access encourages firms to upgrade technology, which lowers the emission intensity of production; however, data limitations confound previous attempts to separately identify productivity impacts from simultaneous changes in prices and product-mix. We present a model of how these alternative channels could also explain the results documented in the literature. Then, using a highly detailed production dataset of large Indian manufacturing firms that contains information on physical units of inputs and outputs by product, we are able to decompose the overall firm impact into three components -- prices, product-mix, and technology. Export impacts at the firm level are identified from import demand shocks of foreign trading partners. We find that prices systematically bias down estimates of emission intensity in value, that firms adjust emission intensity in quantity through changing output shares across products, but that firms do not lower emission intensity within products over time (technology). The results imply that the productivity benefits from market integration alone are not enough to induce clean technology adoption. The second chapter investigates the ``third-party'' impact of trade liberalization on the environmental performance of firms in countries that lose market share as a result of the liberalization. If competition matters for exporting (as previous research indicates), and exporting matters for emission intensity, then emission intensity reductions in liberalized markets may be offset by emission intensity increases in countries peripheral to the liberalization. To test for this indirect effect, we exploit quasi-natural variation arising from the elimination of quota constraints on textile and apparel exports to the US between 1994 and 2007. Using a detailed panel of production and emission data at the firm-product level, we find that Indian exporters in Prowess lost on average 14% export sales as a result of liberalized trade between the US and India's competitors. This loss of export sales was accompanied by an increase in CO2 intensity of 9%. The results do not appear to be due to fuel-switching, but there is suggestive evidence that capital investments and switching to higher emission intensity varieties may have played a role. Overall, the results support the importance of international competition for production and pollution decisions of firms around the world.The final chapter uses aggregate data to estimate supply, price, land-use, and greenhouse gas impacts of genetically engineered (GE) seed adoption due both to increased yield per hectare (intensive margin) and increased planted area (extensive margin). An adoption model with profitability and risk considerations distinguishes between the two margins, where the intensive margin results from direct ``gene" impacts and higher complementary input use, and the extensive margin reflects the growing range of lands that become profitable with the GE technology. We identify yield increases from cross-country time series variation in GE adoption share within the main GE crops- cotton, corn, and soybeans. We find that GE increased yields 34% for cotton, 12% for corn and 3% for soybeans. We then estimate quantity of extensive margin lands from year-to-year changes in traditional and GE planted area. If all production on the extensive margin is attributed to GE technology, the supply effect of GE increases from 5% to 12% for corn, 15% to 20% for cotton, and 2% to 40% for soybeans, generating significant downward pressure on prices. Finally, we compute ``saved" lands and greenhouse gases as the difference between observed hectarage per crop and counterfactual hectarage needed to generate the same output without the yield boost from GE. We find that all together, GE saved 13 million hectares of land from conversion to agriculture in 2010, and averted emissions are equivalent to roughly 1/8 the annual emissions from automobiles in the US

Foreign Demand, Developing Country Exports, and CO2 Emissions: Firm-Level Evidence from India

With asymmetric climate policies, regulation in one country can be undercut by missions growth in another. Previous research finds evidence that regulation erodes the competitiveness of domestic firms and leads to higher imports, but increased imports need not imply increased emissions if domestic sales are jointly determined with export sales or if emission intensity of manufacturing adjusts endogenously to foreign demand. In this paper, we estimate for the first time how production and emissions of manufacturing firms in one country respond to foreign demand shocks in trading partner markets. Using a panel of large Indian manufacturers and an instrumental variable strategy, we find that foreign demand growth leads to higher exports, domestic sales, production, and CO2 emissions, and slightly lower emission intensity. The results imply that a representative exporter facing the average observed foreign demand growth over the period 1995-2011 would have increased CO2 emissions by 1.39% annually as a result of foreign demand growth, which translates into 6.69% total increase in CO2 emissions from Indian manufacturing over the period. Breaking down emission intensity reduction into component channels, we find some evidence of product-mix effects, but fail to reject the null of no change in technology. Back of the envelope calculations indicate that environmental regulation that doubles energy prices world-wide (except in India) would only increase CO2 emissions from India by 1.5%. Thus, while leakage fears are legitimate, the magnitude appears fairly small in the context of India

Cleaner Firms or Cleaner Products? How Product Mix Shapes Emission Intensity from Manufacturing

International audienceWe explore the contribution of product mix in determining firm and aggregate emission intensity. First, using detailed firm-product emission intensity data from India, we find that more efficient firms are less emission intensive, and that products with the largest sales tend to be cleaner than other products within the firm. We also find that emission intensity in India dropped significantly between 1990-2010 through reallocations across firms, while product mix played a counteracting role in increasing firm emission intensity. Next, we develop a multi-product multi-factor model with heterogeneous firms, variable markups, and monopolistic competition in which each product has a specific emission intensity. We find that pro-competitive market developments lead to an improvement in the aggregate emission intensity – through reallocations across firms – even though firms can become dirtier or cleaner through product mix. This theoretical result fits particularly well the empirical facts

Testing the Theory of Trade Policy: Evidence from the Abrupt End of the Multifiber Arrangement

Quota restrictions on United States imports of apparel and textiles under the multifiber arrangement (MFA) ended abruptly in January 2005. This change in policy was large, predetermined, and fully anticipated, making it an ideal natural experiment for testing the theory of trade policy. Prices of quota-constrained categories from China fell by 38% in 2005, with smaller declines from other exporters. Prices in unconstrained categories from all countries changed little. We also find substantial quality downgrading in imports from China in previously constrained categories. The annual cost of the MFAto U.S. consumers was $63 per household. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

The Impact of Agricultural Biotechnology on Supply and Land-Use

Increased demand for agricultural produce for food, fiber, feed, and energy generates a tradeoff between high prices and environmentally costly land conversion. Genetically engineered (GE) seeds can potentially increase supply without recruiting new lands to production. We develop a simple adoption model to show how first-generation GE increases yield per hectare. We identify yield increases from cross country time series variation in GE adoption share within the main GE crops- cotton, corn, and soybeans. We find that GE increased yields 34% for cotton, 32% for corn, but only 2% for soybeans. The model also predicts that GE extends the range of lands that can be farmed profitably. If the output on these lands are attributed to GE technology, then overall supply effects are larger than previously understood. Considering this extensive margin effect, the supply effect of GE increases from 10% to 16% for corn, 15% to 20% for cotton, and 2% to 39% for soybeans, generating significant downward pressure on prices. Finally, we compute \saved" lands and greenhouse gasses as the difference between observed hectarage per crop and counterfactual hectarage needed to generate the same output without the yield boost from GE. We find that all together, GE saved 21million Ha of land from conversion to agriculture in 2010, or 0.41 Gt ofCO2emissions (using a constantCO2/land conversion factor). These averted emissions are equivalent to roughly 1/3 the annual emissions from driving in the US

Production Function Estimation with Multi-Destination Firms

We develop a procedure to estimate production functions, elasticities of demand, and productivity when firms endogenously select into multiple destination markets where they compete imperfectly, and when researchers observe output denominated only in value. We show that ignoring the multi-destination dimension (i.e., exporting) yields biased and inconsistent inference. Our estimator extends the two-stage procedure of Gandhi et al. (2020) to this setting, which allows for cross-market complementarities. In Monte Carlo simulations, we show that our estimator is consistent and performs well in finite samples. Using French manufacturing data, we find aver- age total returns to scale greater than 1, average returns to variable inputs less than 1, price elasticities of demand between -21.5 and -3.4, and learning-by-exporting effects between 0 and 4% per year. Alternative estimation procedures yield unrealistic estimates of returns to scale, demand elasticities, or both