Sacred Cars? Cost-Effective Regulation of Stationary and Nonstationary Pollution Sources

For political and practical reasons, environmental regulations sometimes treat point-source polluters, such as power plants, differently from mobile-source polluters, such as vehicles. This paper measures the extent of this regulatory asymmetry in the case of nitrogen oxides (NO_x), the most recalcitrant criteria air pollutant in the United States. We find significant differences in marginal abatement costs across source types: the marginal cost of reducing NO_x from cars is less than half the marginal cost of reducing NO_x from power plants. Our results measure the possible efficiency gains and distributional implications associated with increasing the sectoral scope of environmental regulations.(JEL Q53, Q58, R41)