Two Page Summaries

Covert, Thomas R. “Experiential and Social Learning in Firms: The Case of Hydraulic Fracturing in the Bakken Shale.” Cambridge, Massachusetts, {USA}: Harvard Environmental Economics Program, 2014.Abstract

Learning how to utilize new technologies is a key step in innovation, yet little is known about how firms actually learn. This paper examines firms' learning behavior using data on their operational choices, profits, and information sets. I study companies using hydraulic fracturing in North Dakota's Bakken Shale formation, where firms must learn the relationship between fracking input use and oil production. Using a new dataset that covers every well since the introduction of fracking to this forma- tion, I find that firms made more profitable input choices over time, but did so slowly and incompletely, only capturing 67% of possible profits from fracking at the end of 2011. To understand what factors may have limited learning, I estimate a model of fracking input use in the presence of technology un- certainty. Firms are more likely to make fracking input choices with higher expected profits and lower standard deviation of profits, consistent with passive learning but not active experimentation. Most firms over-weight their own information relative to observable information generated by others. These results suggest the existence of economically important frictions in the learning process.

dp53_covert.pdf dp53_covert_two-page-summary.pdf
Allcott, Hunt, and Richard Sweeney. “Information Disclosure through Agents: Evidence from a Field Experiment.” Cambridge, Massachusetts, {USA}: Harvard Environmental Economics Program, 2014.Abstract

With a large nationwide retailer, we run a natural field experiment to measure the effects of energy use information disclosure, rebates, and sales agent incentives on demand for energy efficient durable goods. Sales incentives and rebates are complementary, but information and sales incentives alone have statistically and economically insignificant effects. Sales agents comply only partially with the experiment, targeting information at the most interested consumers but not discussing energy efficiency with the disinterested majority. In follow-up surveys, most consumers are aware of the energy efficient model and may even overestimate its benefits, suggesting that imperfect information is not a major barrier to adoption in this context.

dp52_allcott-sweeney.pdf dp52_allcott-sweeney_two-page-summary.pdf
Kopczuk, Wojciech, Justin Marion, Erich Muehlegger, and Joel Slemrod. “Do the Laws of Tax Incidence Hold? Point of Collection and the Pass-through of State Diesel Taxes.” Cambridge, Massachusetts, {USA}: Harvard Environmental Economics Program, 2013.Abstract

The canonical theory of taxation holds that the incidence of a tax is independent of the side of the market which is responsible for remitting the tax to the government. However, this prediction does not survive in certain circumstances, for example when the ability to evade taxes differs across economic agents. In this paper, we estimate in the context of state diesel fuel taxes how the incidence of a quantity tax depends on the point of tax collection, where the level of the supply chain responsible for remitting the tax varies across states and over time. Our results indicate that moving the point of tax collection from the retail station to higher in the supply chain substantially raises the pass-through of diesel taxes to the retail price. Furthermore, tax revenues respond positively to collecting taxes from the distributor or prime supplier rather than from the retailer, suggesting that evasion is the likely explanation for the incidence result.

dp50_muehlegger-etal.pdf dp50_muehlegger-etal_two-page-summary.pdf
Greenstone, Michael, and Rema Hanna. “Environmental Regulations, Air and Water Pollution, and Infant Mortality in India.” Cambridge, Massachusetts, {USA}: Harvard Environmental Economics Program, 2012.Abstract

Using the most comprehensive data file ever compiled on air pollution, water pollution, environmental regulations, and infant mortality from a developing country, the paper examines the effectiveness of India’s environmental regulations. The air pollution regulations were effective at reducing ambient concentrations of particulate matter, sulfur dioxide, and nitrogen dioxide. The most successful air pollution regulation is associated with a modest and statistically insignificant decline in infant mortality. However, the water pollution regulations had no observable effect. Overall, these results contradict the conventional wisdom that environmental quality is a deterministic function of income and underscore the role of institutions and politics.

dp40_hanna-greenstone.pdf dp40_hanna-greenstone_two-page-summary.pdf