Economists have established that trading in cap and trade allows the firm that values the permit the most to obtain it, suggesting the increase in profitability or reduction in costs of the industry, compared to non-tradable permits. Why? I propose a new perspective as a mechanism why cap and trade may increase cost efficiency of firms, especially when trading leads to consolidation such as the case of tradable fishing permits. I show trading helps firms improve productivity and exploit their existing economies of scale. Overcoming the unobserved-cost challenge, I extend the literature on production functions to show a sufficient statistic to estimate vessel-by-year economies of scale. I combine the estimate with a difference-in-difference strategy that exploits the policy transition from non-tradable permits to tradable permits in the Norwegian cod fishery to identify the causal impacts of trading fishing quotas. I find that vessels acquired quotas, realized economies of scale, and moved toward the minimum average cost levels by increasing their sizes and going fishing more often. In decomposition of the value of trading, economies of scale played a main role in the first few years after a big vessel acquired quotas. These results highlight: (i) trade-induced consolidation in environmental regulations can benefit firms through reducing production costs, (ii) resource rent may be under-estimated if we ignore economies of scale, and (iii) economies of scale can be measured as a benefit of consolidation to weigh against the market power concern.

Forming sound environmental justice policy involves understanding whether the correlation between race and environmental bads results from the disproportionate siting of locally unwanted land uses or nuisance-driven residential mobility. This paper presents evidence of residential sorting in the context of municipal solid waste disposal facilities, using a difference-in-difference strategy. Specifically, I compare changes in population after an opening (and closing) of a trash site between blocks within one mile to faraway blocks. Results show a 11% decrease in white population and a 44% increase in Hispanic population in a block after a trash site opened within one mile. Closing the site does not change white population immediately while inducing a 11% fall in Hispanic population, relative to the period during which the site was operating.

Spot market indices for the freight markets in bulk shipping, such as those produced by the Baltic Exchange, are estimated by brokers based on a fixed lead time (e.g. “Laydays/cancelling 10/20 days from index date"). In reality, ships can be fixed anywhere along a route such that there may also be a spatial component in the spot freight rate for individual fixtures. Consequently, there is not a single spot rate on a given date, but many along the distance (or time-to-loading) dimension. That is, there exists effectively a spatial “term structure of spot freight rates". Such a spatial component may reflect the degree of risk aversion of shipowners and charterers and is therefore expected to be market dependent. For instance, charterers may worry about transportation shortage in a strong market and be willing to fix ships early at relatively higher rates, while owners may accept a discount for early ships in a poor market just to secure employment. The objective of this paper is to investigate the time-varying properties of spot rates jointly in the time and space dimension.