This dissertation uses applied microeconomic tools to study three topics of fundamental importance for the regulation of the urban environment: housing, pollution, and the criminal justice system. The first chapter considers the mortgage market, and analyzes the regulatory tradeoff between optimal credit access and mortgage default. The second chapter examines the difficulties of designing environmental policy in interlinked production processes. In particular, we investigate (i) the impact of regulation on the producers of an upstream good on the pollution practices of the downstream firms that process that good and (ii) the subsequent health impacts on those who live in the cities and towns surrounding the downstream firms. The third chapter explores the bail system used for criminal defendants in the United States, and shows that the requirement that defendants post money bail has profound impacts on case outcomes. Chapter 1, "Asymmetric Information and the Link Between Leverage and Mortgage Default" begins with the observation that borrowers with large mortgages relative to their home values are more likely to default. This chapter asks whether this correlation is due to moral hazard---larger balances causing borrowers to default---or adverse selection---ex-ante risky borrowers choosing larger loans. To separate these information asymmetries, I exploit a natural experiment resulting from (i) the unique contract structure of Option Adjustable Rate Mortgages and (ii) the unexpected divergence, during the 2008 crisis, of two financial indices used to determine interest rate adjustments for these loans. I find that moral hazard is responsible for 60-70 percent of the baseline correlation between leverage and default, but adverse selection explains the remaining 30-40 percent. I construct and calibrate a simple model of mortgage choice and default with asymmetric information to highlight the policy tradeoff informed by my estimates. I show that optimal regulation of mortgage leverage must weigh losses from defaults against under-provision of credit due to adverse selection. In Chapter 2, "Interlinked Firms and the Consequences of Piecemeal Regulation", coauthored with Jonas Hjort and Gianmarco Leon, we note that industrial regulations are typically designed with a particular policy objective and set of firms in mind. Yet when input-output linkages connect firms across sectors, such ``piecemeal'' regulations may worsen externalities elsewhere in the economy. Using daily administrative and survey data, we show that in Peru's industrial fishing sector, the world's largest, air pollution from downstream (fishmeal) manufacturing plants caused 55,000 additional respiratory hospital admissions per year as a consequence of the introduction of individual property rights (over fish) upstream. By removing suppliers' incentive to ``race'' for the resource and enabling market share to move from inefficient to efficient firms, the reform spread production out across time, as predicted by a conceptual framework of vertically connected sectors. We show that longer periods of moderate air polluting production are worse for health than shorter periods of higher intensity exposure. Our findings demonstrate the risks of piecemeal regulatory design in interlinked economies. In Chapter 3, "The Heavy Costs of High Bail: Evidence from Judge Randomization", coauthored with Ethan Frenchman and Arpit Gupta, considers the bail system in the United States. On any given day, roughly 450,000 people are detained awaiting trial, typically because they have not posted bail. Using a large sample of criminal cases in Philadelphia and Pittsburgh, we analyze the consequences of the money bail system by exploiting the variation in bail-setting tendencies among randomly assigned bail judges. Our estimates suggest that the assignment of money bail causes a 12% rise in the likelihood of conviction, and a 6--9% rise in recidivism. Our results highlight the importance of credit constraints in shaping defendant outcomes and point to important fairness considerations in the institutional design of the American money bail system.

No panacea exists for the resolution of environmental problems. In South Africa environmental control is affected almost exclusively by way of direct prohibition an~ regulation. These policies have serious limitations predominantly as a result of legal and administrative inadequacies. The remedy of these inadequacies is not feasible and alternative, complementary or replacement control policies are needed. This report reviews a number of alternative policies, most of which rely on market related mechanisms, in the context of pollution, resource destruction and land use problems. In addition, current financial legislation is replete with provisions contributing towards the exacerbation of environmental ills. These anomalous provisions must be re-evaluated in terms of material objectives, which must include the need for sound environmental resource management. A number of provisions do, however, offer some potential for conservation activities. These provisions, together with some innovative schemes, are introduced in the report and deserve further research.

Keung Kam-Yin. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2004. / Includes bibliographical references (leaves 72-80). / Abstracts in English and Chinese. / Chapter Chapter 1 --- Overview --- p.1 / Chapter Chapter 2 --- Literature Review --- p.5 / Chapter 2.1 --- Income growth and pollution --- p.5 / Chapter 2.2 --- Environmental regulations and comparative advantage --- p.6 / Chapter 2.3 --- Welfare implications : Optimal policy in a second-best world --- p.9 / Chapter 2.4 --- Unemployment and the Environment --- p.11 / Chapter 2.5 --- Labor Union and International Trade --- p.12 / Chapter Chapter 3 --- Tariffs and the Environment --- p.14 / Chapter 3.1 --- The model --- p.14 / Chapter 3.2 --- Resource Allocation -The effects of import tariffs --- p.19 / Chapter 3.3 --- National welfare --- p.23 / Chapter 3.4 --- Trade Liberalization --- p.26 / Chapter Chapter 4 --- Tariffs，Unemployment and the Environment --- p.28 / Chapter 4.1 --- The model --- p.30 / Chapter 4.2 --- Resource Allocation - The effects of import tariffs --- p.33 / Chapter 4.3 --- National Welfare --- p.37 / Chapter 4.4 --- Trade Liberalization --- p.40 / Chapter Chapter 5 --- "Tariffs, Labor Unions and the Environment" --- p.42 / Chapter 5.1 --- The model --- p.43 / Chapter 5.2 --- Resource Allocation - The effects of import tariffs --- p.48 / Chapter 5.3 --- National Welfare --- p.52 / Chapter 5.4 --- Trade Liberalization --- p.54 / Chapter Chapter 6 --- Concluding Remarks --- p.57 / Appendix I --- p.60 / Appendix II --- p.64 / Appendix III --- p.67 / References --- p.72

We develop a dynamic model that explicitly considers the trans-boundary pollution problem between two asymmetric countries. We found that the countries will enjoy higher long run growth rates and a higher environmental quality when they coordinate their environmental policies. Furthermore, the two countries suffer more heavily not cooperating with each other when their attitudes towards a cleaner environment differ greatly. The implication is that despite the inherent differences in their development level and in their environmental attitudes, developed and developing countries are strongly encouraged to cooperate environmentally. In the second part of the thesis, we turn the focus to the role of international trade in relation to economic growth and the environment. We found that the long run growth rates of the countries are lower when they engage in international trade, no matter whether the environmental externality is internalised or not. The impact of trade on welfare however is ambiguous. / Thesis (M.Ec.)--School of Economics, 2004.

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This dissertation closely examines the merits, weaknesses, and potential of decentralized environmental regulation. I examine three areas of particular concern in the structure of environmental regulation. In the first chapter, I examine how information problems resulting from incorrectly specified atmospheric models are likely to affect economic efficiency in a permit market. While permit markets have been heralded as a promising solution for controlling environmentally damaging emissions, there is no formal research linking the atmospheric model, which directly affects permit prices, with economic outcomes. In the chapter, I develop a generalized theoretical model that demonstrates the problems that are likely to arise when there is uncertainty in the underlying atmospheric parameter estimates. As it turns out, permit markets operating with incorrectly specified atmospheric models may result in large losses in economic efficiency, even if the permit market is operating ideally in an economic sense. The second chapter analyzes a much broader issue, that of state versus federal environmental regulation. The chapter focuses on the methods used by states attempting to control interstate water pollution in the Ohio Valley in the early 1900s. The time period was chosen to predate federal intervention into environmental regulation and, hence, allows for a clean test of how states might be expected to address difficult pollution problems under a system of state regulation. Using a simple game theoretic model, the paper explores interstate water pollution control compacts and their uses in addressing interstate water pollution. I find that states were able to overcome significant bargaining difficulties in formulating the compacts, which ultimately led to effective control of interstate water pollution. The final chapter focuses on voluntary overcompliance by firms facing environmental standards. The paper models environmental regulation according to the EPA's Best Available Control Technology (BACT). The model predicts voluntary overcompliance by firms as they attempt to raise the (endogenous) environmental standard and, in the process, raise their rivals' costs. The paper also demonstrates the merits of nonuniform environmental standards. In attempting to elicit efficient levels of R&D investment, the regulatory authority may discourage socially wasteful overinvestment in pollution technology through the use of nonuniform standards.

This thesis is composed of three essays. In the first essay I identify the effects of imposing a broad range of environmental regulations under different market conditions.. I compare four types of regulatory controls under Perfect Competition, Monopoly, and Cournot Competition: Emission Standards, Design Standards, Concentration Standards, and Output Standards. I rank each of the standards in terms of firm profitability, industry output, abatement costs, and social welfare. I derive sufficient conditions for Design, or Concentration Standards, to dominate Emission Standards. I show how the different forms of regulation can raise industry profits by reducing the degree of inter-firm competition. Further, I show how environmental regulations can enhance competition and yield a "double dividend": higher Social Surplus and less pollution. In the second essay I extend the comparison of standards to an open country. I show how a country's choice of regulatory regime influences the level of environmental protection when governments care about the competitiveness of their industries. I show that the mode of regulation can create a "race to the bottom" if regulators behave strategically. I show that Emission Standards permit the race, as do Emission Charges. Design Standards, on the other hand, avoid the race altogether by breaking the link between environmental stringency and industrial competitiveness. Countries using Design Standards will always regulate emissions. This holds regardless of the environmental stance taken by competitor nations. If countries do not behave strategically, then Emission Standards and Emission Charges always dominate Design Standards. In the third essay I use the concept of home biases in traded goods, or "Border Effects", to rank industries and countries in terms of their openness to trade. I first confirm the presence border effects for individual sectors and individual industries among OECD countries for 1970 to 1985. I also examine whether country-specific border effects are determined by the sectoral composition of a country's production. I find limited evidence to support this. Rather, per capita incomes appear to be the most important factor. The conclusion I draw is that the level of development appears to be the prime factor in explaining the differences in country-specific border effects. What countries produce is of some importance. Therefore, we should see continued, though possibly slow, reductions in home biases as all countries continue to develop. This will partially determine the kind of environmental regulation used as well as their level.

This thesis is composed of three essays. In the first essay I identify the effects of imposing a broad range of environmental regulations under different market conditions.. I compare four types of regulatory controls under Perfect Competition, Monopoly, and Cournot Competition: Emission Standards, Design Standards, Concentration Standards, and Output Standards. I rank each of the standards in terms of firm profitability, industry output, abatement costs, and social welfare. I derive sufficient conditions for Design, or Concentration Standards, to dominate Emission Standards. I show how the different forms of regulation can raise industry profits by reducing the degree of inter-firm competition. Further, I show how environmental regulations can enhance competition and yield a "double dividend": higher Social Surplus and less pollution. In the second essay I extend the comparison of standards to an open country. I show how a country's choice of regulatory regime influences the level of environmental protection when governments care about the competitiveness of their industries. I show that the mode of regulation can create a "race to the bottom" if regulators behave strategically. I show that Emission Standards permit the race, as do Emission Charges. Design Standards, on the other hand, avoid the race altogether by breaking the link between environmental stringency and industrial competitiveness. Countries using Design Standards will always regulate emissions. This holds regardless of the environmental stance taken by competitor nations. If countries do not behave strategically, then Emission Standards and Emission Charges always dominate Design Standards. In the third essay I use the concept of home biases in traded goods, or "Border Effects", to rank industries and countries in terms of their openness to trade. I first confirm the presence border effects for individual sectors and individual industries among OECD countries for 1970 to 1985. I also examine whether country-specific border effects are determined by the sectoral composition of a country's production. I find limited evidence to support this. Rather, per capita incomes appear to be the most important factor. The conclusion I draw is that the level of development appears to be the prime factor in explaining the differences in country-specific border effects. What countries produce is of some importance. Therefore, we should see continued, though possibly slow, reductions in home biases as all countries continue to develop. This will partially determine the kind of environmental regulation used as well as their level. / Arts, Faculty of / Vancouver School of Economics / Graduate

published_or_final_version / Environmental Management / Master / Master of Science in Environmental Management

Shek Ming Hon. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2002. / Includes bibliographical references (leaves 50-54). / Abstracts in English and Chinese. / Chapter 1 --- Introduction --- p.1 / Chapter 2 --- Literature Review --- p.4 / Chapter 2.1 --- Income Level and Environmental policy --- p.4 / Chapter 2.2 --- International Trade and Environmental policy --- p.5 / Chapter 2.3 --- Other taxes and Environmental taxation --- p.7 / Chapter 2.4 --- Unemployment --- p.8 / Chapter 2.5 --- Tax and Tax Credits --- p.9 / Chapter 2.6 --- Foreigrt Investment and Environmental policy --- p.9 / Chapter 2.7 --- Pollution and Unemployment --- p.11 / Chapter 3 --- The Fr amework --- p.13 / Chapter 3.1 --- Resource allocation --- p.21 / Chapter 3.2 --- National Welfare --- p.22 / Chapter 3.2.1 --- Optimal Capital Taxes --- p.23 / Chapter 3.2.2 --- Optimal Environmental Taxes --- p.26 / Chapter 3.2.3 --- Jointly Optimal Policies --- p.29 / Chapter 3.3 --- Tariff Liberalization and Taxes --- p.33 / Chapter 4 --- Trade and pollution Policies under Investment Tax Credits --- p.35 / Chapter 4.1 --- Welfare Analysis on Capital Tax --- p.38 / Chapter 4.2 --- Welfare analysis on Capital Subsidy --- p.40 / Chapter 4.3 --- Policy in Simultaneous Change --- p.41 / Chapter 4.3.1 --- Capital Tax --- p.41 / Chapter 4.3.2 --- Capital subsidy --- p.45 / Chapter 5 --- Concluding Remarks --- p.48 / Chapter 6 --- Appendix --- p.55 / Chapter 6.1 --- Resource allocation --- p.55 / Chapter 6.2 --- Unemployment effect --- p.57 / Chapter 6.3 --- Cost and benefit of production of good X --- p.58 / Chapter 6.4 --- The 7 ° and s° schedules --- p.58