Research

Published papers in economics

Martin, L. and K. Zhang (2021). "Changing Population Exposure to Pollution in China’s Special Economic Zones." AEA Papers and Proceedings. In press. SSRN (ungated).

Byrne, D. and L. Martin (2021). "Consumer Search and Income Inequality." International Journal of Industrial Organization. In press.

Byrne, D., L. Martin, and A. La Nauze (2021). "An Experimental Study of Monthly Electricity Demand (In)elasticity." Energy Journal. 42(2), 205-222. SSRN (ungated)

Byrne, D., L. Martin, and A. La Nauze (2018). "Tell Me Something I Don't Already Know: Informedness and the Impact of Information Programs." Review of Economics and Statistics. 100(3): 510-527.

Reynolds, M., B. Sullivan, E. Hallstein, S. Matsumoto, S. Kelling, M. Merrifield, D. Fink, A. Johnston, W. Hochachka, N. Bruns, M. Reiter, S. Veloz, C. Hickey, N. Elliott, L. Martin, J. Fitzpatrick, P. Spraycar, G. Golet, C. McColl and S. Morrison (2017). "Dynamic Conservation for Migratory Species." Science Advances 3(8), Aug 23, 2017.

Martin, L., S. Nataraj, and A. Harrison (2017). "In with the Big, Out with the Small: Removing Small-Scale Reservations in India." American Economic Review, 107(2): 354–386.

Harrison, A., L. Martin, and S. Nataraj (2017). "Green Industrial Policy in Emerging Markets" Annual Review of Resource Economics, 9: 5.1-5.22.

Harrison, A., L. Martin, and S. Nataraj (2012). "Learning Versus Stealing: How Important are Market-Share Reallocations to India's Productivity Growth?" World Bank Economic Review, 27(2), 202-228.

Main working papers

"Price Discrimination, Search, and Negotiation in an Oligopoly: A Field Experiment in Retail Electricity" with David Byrne and Jia Sheen Nah. Revise and resubmit at the Quarterly Journal of Economics. SSRN April 2019 draft.

We use a field experiment to study price discrimination in a market with price posting and negotiation. Motivated by concerns that low-income consumers do poorly in markets with privately-negotiated prices, we built a call center staffed with actors armed with bargaining scripts to reveal the determinants of negotiated prices. By experimentally manipulating how information is revealed within a sequential bargaining game, we identify price discrimination based on ex-ante perceived search costs at the start of negotiations which can be overcome if consumers ex-post reveal they are informed about market prices. Combining posted and negotiated prices, we further document important asymmetries between incumbents’ and entrants’ pricing structures that segment consumers based on their willingness to search and bargain. Finally, we show that incomplete subsidy pass-through for low-income households observed in our market is not due to discriminatory targeting; it can be explained by variation in consumers' willingness and ability to search and bargain.

"The Margins of Response to Road Use Prices" with Sam Thornton. SSRN Nov 2017 draft.

We use a large field experiment to document who responds to road use prices and explore the extent to which distance, time of day, and location-based charges would actually reduce congestion. The experiment collected six-second location data from GPS transponders installed in 1400 vehicles over a nine month period and implemented different prices via a system of credit accounts. We find an average price elasticity of -0.11 to uniform per kilometer charges, which is consistent with the literature on short-term demand response to fuel price increases. We also provide evidence that higher fuel taxes are unlikely to reduce congestion in the short-run. Under the price reforms that we test, drivers primarily drop trip segments that were not contributing to congestion externalities. Time-varying and location-based charges were more effective than uniform per kilometer charges at changing behaviour in a way that would have improved road conditions, but not overwhelmingly successful at doing so. Finally, we show that because low-income drivers contribute least to congestion externalities and respond most to road use charges, they would be better off if existing sources of road revenues were replaced with fees that better reflect each driver's contribution to road use externalities.

"When do Firms Go Green? Comparing Price Incentives with Command and Control Regulations in India" with Ann Harrison, Ben Hyman, and Shanthi Nataraj. NBER working paper.

Command-and-control (CAC) environmental regulation is commonly believed to deliver environmental outcomes at very high cost. We study establishment-level responses in a large developing country to a set of centrally-imposed but locally-implemented CAC policies. We observe increased investments in abatement equipment and reduced coal use, especially in regions that previously had a poor record of compliance with local environmental regulations. We also document a previously under-discussed margin for protecting high-value areas in countries that are growing rapidly: deterred entry by high-polluting industries into regulated zones. We show that under the CAC policies compliance and productivity costs were borne exclusively by targeted industries and firms. In contrast, variation in coal prices unrelated to the regulation lead to reductions in coal use across all firms. Our estimated coal price elasticity suggests that a 15-30\% excise tax would be needed to generate reductions in coal consumption equivalent to those produced by these CAC policies.

Papers temporarily on pause

"I'm Sitting This One Out: What non-participants reveal about counterfactual emissions" with Kim Liu.

In a voluntary emissions-reductions system, regulators must evaluate and sign off on firms' claims of what they would do absent credits. This paper uses the behavior of non-participants to ex-post evaluate these claims. We focus on carbon offset projects in industrial energy efficiency, co-generation, input substitution, and fuel switching that are supplied by firms in India to the international emissions trading market through the Clean Development Mechanism (CDM). We identify the firms involved in over 600 CDM projects in a comprehensive dataset of Indian manufacturing firms. We first look for signs of strategic selection into program participation. After controlling for firm size and industry, there is no evidence that applicants are more likely to have decreasing emissions trends pre-application. We then evaluate behavior ex-post. We find that participants indeed reduce emissions intensity relative to similar non-participant firms, but in a way that is moderated by a greater expansion of output. Looking across project types, the largest emission reductions come from projects that improve energy efficiency and export excess energy to the grid. Fuel switching and input blending projects are more questionable recipients of credits because non-participants engage in these activities at similar rates.

"Credit Where Credit's Due? Local Development Co-Benefits of the CDM in India" with Priyanka Banerjee.

There is increasing interest in promoting social impact investing that can leverage private capital and expertise for environmental goals. The Clean Development Mechanism (CDM) was launched in 2006 to direct private funds into projects that reduce GHG emissions in developing countries. It is the largest system of carbon offsets in the world. We ask: did it indeed deliver sustainable development co-benefits to communities that hosted projects? We show that, in India, CDM projects followed FDI flows to districts with better public infrastructure. Comparing trends in districts that received CDM projects to similar ones that did not, we show that projects reduced poverty and accelerated the convergence of infant mortality rates. Hosting a project led, on average, to a 3 percentage point reduction in poverty. Renewable energy, energy efficiency, and methane avoidance projects were particularly effective in improving these outcomes. HFC projects were not. The results reflect positively on the sustainable development benefits of carbon offsets in rapidly industrialising countries, and underscore the importance of the recent growth in renewable energy and energy efficiency projects.

"When Giants Take Steps: The impact of conservation targets on China's largest energy-consuming firms," with Miao Liu.

Due to increasing coal use and related emissions, in 2006 the Chinese government mandated that the top 1000 energy-using firms adopt strict targets for reducing industrial energy consumption. This paper exploits the structure of the Top 1000 program to investigate the costs and benefits of an energy efficiency program in a rapidly industrialising economy. We match the Chinese Annual Census of Industrial Enterprises of over 200,000 firms per year with Top 1000 participation data and city-level air quality and economic outcomes. We find that although participating firms' productivity grows slower than that of non-participating firms, the difference in growth rates is very small (less than 1%). Although we cannot rule out that overstated compliance lowered program cost, we find significant improvements in city-level air quality associated with the program, suggesting that firms did indeed respond.

"Energy efficiency gains from trade: greenhouse gas emissions and India's manufacturing sector" 2011-2012 JMP.

Using 19 years of annual data from over 30,000 firms, I show that India's 1991 trade liberalization and market reforms lead to within-firm improvements in energy efficiency and reallocation of market share to more energy-efficient firms. This shift mitigated post-liberalization growth in energy use and associated greenhouse gas emissions. Two mechanisms led to increases in emissions intensity: increasing generator use post-liberalization and decreasing tariffs on intermediate material inputs, which helped firms that use inputs inefficiently to retain market share. But reductions in tariffs on intermediate capital inputs led to a 23% improvement in within-firm fuel efficiency. And liberalization of FDI and licensing requirements led to reallocations of market share to more fuel-efficient firms, further reducing emissions.

Older work (system dynamics, climate change adaptation)

L. Martin, et al. (2007) "Gaming with a microworld of a local product chain in the Oder river basin, Lower Silesia, Poland.” Simulation & Gaming, special issue on Natural Resource Management. Volume 38 , Issue 2, pp. 211 – 232.

Sexton, S., L. Martin, and D. Zilberman. "Biofuel and Biotech: A Sustainable Energy Solution." ARE Update, Vol. 9, No. 3, Jan/Feb, 2006.

Newman, J., L. Martin (2005). "A Poverty and Social Impact Analysis of the Cost of Pension Reform in Bolivia." World Bank, Washington DC.

Newman, J., M. Velasco, L. Martin, A. Fantini (2003). "A System Dynamics Approach to Monitoring and Evaluation at the Country Level: An Application to the Evaluation of Malaria-Control Programs in Bolivia." Fifth Biennial World Bank Conference on Evaluation and Development Evaluating Development Effectiveness: Challenges and the Way Forward Washington, DC 15-16 July 2003.

Freeman, P., L. Martin, R. Mechler, K. Warner with P. Hausman (2002). "Catastrophes and Development, Integrating Natural Catastrophes into Development Planning," Disaster Risk Management Working Paper Series No. 4. Washington DC, World Bank.