Note: T-statistics are shown in parentheses. Significance at the 95% and 99% confidence levels are indicated by * and **, respectively. Dependent variable is the log of the median of SO concentrations at each observation site.

Table 1 presents initial estimates from our random and fixed effect implementation of (3.2). There are three important properties shown in the table.

First, there is a comforting consistency across the regressions in both the size and sign of the estimated coefficients. Second, at conventional levels of significance the vast majority of all coefficients are statistically different from zero. Third, the results are almost universally in line with the theory detailed in section 2.

Note: The results shown were obtained through a random-effects estimation. T-statistics are shown in parentheses. Significance at the 95% and 99% confidence levels are indicated by * and **, respectively. Dependent variable is the log of the median of SO concentrations at each observation site. Note that the black market premium, average tariff and quota coverage variables measure the inverse of openness; their sign has thus to be reversed to interpret the direction of the estimates as an increase in openness.

Consider our core variables representing scale, composition and technique effects. In both columns of table 1 we find a positive relationship between the scale of economic activity as measured by GDP/km and concentrations. Similarly, both columns report that an increase in the capital labor ratio raises emissions – consistent with a positive composition effect – albeit increases in this ratio have a diminishing impact much as we may expect. This diminishing effect probably reflects a lower average pollution intensity of capital equipment in high-income countries. guaranteed payday loans

Our theory predicts that high-income countries have tighter standards in place, and this in turn implies the pollution consequences of capital accumulation should fall as development proceeds. Finally, the income per capita terms indicate a strong and significantly negative relationship between per capita income levels and concentrations. We again find a diminishing effect but it is less pronounced than that for the capital to labor ratio.