While there is abundant evidence demonstrating that residents permanently migrate in search of locations with cleaner air, there are considerably fewer studies that investigate if travellers also take short-term trips to reduce their exposure to air pollution. In this study, we use a complete dataset of flights at Beijing International Airport to investigate if travel patterns are indeed correlated with air quality-differences across cities in China. Our identification strategy is aided by instrumenting air quality using thermal inversions.

This study provides evidence that trade expansion has contributed to the degradation of air pollution in China. On the basis of different responses of counties’ trade to China's World Trade Organization accession at the end of 2001, we exploit air pollution data from NASA to construct a difference‐in‐differences predicted trade as an instrument for our identification. We document statistically significant and robust evidence on trade expansion, which accounts for approximately 60% and 20% for the increase of PM2.5 and SO2, respectively, in China.

Using experiments in which participants play the role of polluting firms, we study compliance behavior with emissions limits under two types of fines and two different regulatory instruments. We find that the market price of pollution permits and the probability of violating permits holdings are higher with a fine that is convex in the level of violation than with one that is linear. This effect operates through an increase in the prices asked by sellers, not in the bids made by the buyers of permits.

Key Messages

Lake Victoria Basin is facing a number of challenges: