Research

Working papers

• A Note of how Re-elections Affect Climate Negotiations (with Jason Shogren) [PDF]
  Abstract

  As Schelling conjectured, domestic political constraints affect the outcomes of negotiations over international public goods, e.g., greenhouse gas mitigation. Current literature suggests both total contributions (home plus foreign country) and home country contributions in a Presidential system subject to a Senate ratification constraint (e.g., U.S.) never exceed those under a home country without domestic constraints (e.g., authoritarian regime like China). Herein we show how this result is reversed by adding another realistic constraint to the Presidential system—a re-election constraint. We find that total contributions and home country contributions with both constraints can exceed those under a system without any domestic constraints.
• Context-dependence Preference for Climate Change Mitigation — the Role of Temperature, Information, and Unprecedented floods (with Botao Qin and Cristian Rojas) [PDF]
  Abstract

  The experimental valuation literature has found that people’s preferences are context-dependent. This paper examines the effects of three different contexts—weather seasons, information, and an unprecedented flooding event—on people’s preference for climate change mitigation. We conducted an online choice experiment in China in both warm and cool seasons. We also explored whether providing information on climate change consequences and an unprecedented flooding event would affect this valuation. Using a mixed logit model and Poe test, we found no significant treatment effects of seasons and information for most of the attributes except for ‘frequency of typhoons’ and ‘costs’. However, we find that when provided with information, respondents’ Willingness to Pay (WTP) for climate change mitigation in general is significantly higher during the cool season than the warm season. In addition, in the warm season, providing information on climate change consequences reduces the WTP for climate change mitigation in general. However, during the cool season, providing information on climate change consequences increases respondents’ WTP for reducing the duration of heatwaves and decreasing biodiversity loss. Finally, we found that the unprecedented flooding event did not change participants’ valuation of climate change mitigation when provided with information on climate change consequences.
• Corporate Governance, Electricity Restructuring, and Pollution Abatement Investment (with Ben Gilbert and Klaas van ‘t Veld) [PDF]
  Abstract

  This paper aims to answer whether the strength of corporate governance, relative to a firm’s financial structure and regulatory environment, affects its cost of capital for abatement investment aimed at complying with environmental regulation. Specifically, we study the U.S. electricity industry’s compliance with a major U.S. emissions trading program. We find that two of three well-known governance indices have no relationship to the implied cost of abatement capital. For the one index that does show a relationship, results suggest that limiting shareholder power—rather than giving shareholders more power—may reduce the cost of capital. These results are on contrary to the conventional wisdom that “the most important benefit of good governance is to raise capital at better terms” (Doidge et al., 2007). These also imply that investor activism aimed at improving firms’ corporate governance might impede their environmental progress. That is, ESG investing might have goals that are in conflict with each other. We also find that the impacts of a firm’s corporate governance on its cost of capital depend on the electricity restructuring status of plants the company owns. Improving governance raises the cost of capital for abatement investment in deregulated plants but has no significant impacts on regulated plants. This is consistent with the fact that regulated plants are allowed to recover capital costs through raising electricity prices, and are thus less dependent on governance quality to raise capital.

Selected Works in Progress

• “Peer Effects in Communities’ Participation of Voluntary Environmental Programs” (with Devan Rawlings and Justin Beaudoin)
• “Diffusion of Environmental Regulation through International Trade” (with Ben Li)

Publications

• Qin, B. Xie, S. Xu, C. Social Recognition, Goal Setting, and Energy Conservation: Evidence from a Field Experiment in Student Dormitories, Energy Policy. (2024) 195,114370.
• Xu, C. (First Author), Li, T. Are Teams Conditionally Cooperative? Experimental Evidence from a Public Goods Game, Economics Letters. (2024)239, 111763.
• Xu, C.(first author), Botao, Q, Rawlings, D. Motivational Crowding Effects of Monetary and Nonmonetary incentives: Evidence from a Common Pool Resources Experiment, Ecological Economics. (2022) 107597
• Xu, C.(first author), Van ‘t Veld, Klass. Team Inspection in the Management of Common-Pool Resources when Corruption is Present, Environmental and Resource Economics. (2020) 75(3), 553-584
• Xu, C.(first author), Van ‘t Veld, Klaas. Social influence and economic incentives: Complements or substitutes?—The case of fighting crimes, Economics Letters. (2019) 180:80-84
• Lei, H., Fang, L., Qian, Z., Xu, C., Deng, M., & Liu, X. The Quantitative Analysis of Ecological Compensation Responsibility in Watershed, Energy Procedia. (2012) 16, 1324-1331
• Xu, C. (First Author), Qian, Z., Li, Y, Peng, B. Modeling Environmental Responsibility Definition in Ecological Compensation of Watershed, Journal of Natural Resources (in Chinese). (2009) 24(8): 1488-1496.