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The transportation sector is a major source of air pollution worldwide, yet little is known about the effects of transportation infrastructure on air quality. In this paper we measure the effects of one major type of transportation infrastructure -urban rail transit -on air quality. Our approach uses the sharp discontinuity in transit utilization on the opening day of a completely new rail transit system in Taipei, Taiwan to identify the air quality effects of rail transit infrastructure.Using hourly air quality data from Taiwan we have three central findings. First, we find that the opening of the Metro reduced air pollution from one key tailpipe pollutant, carbon monoxide, by 5 to 15 percent. Second, we find little evidence that the opening of the Metro affected ground level ozone pollution. Third, we find little evidence suggesting that automobile travelers adjusted their time or route of travel to the availability of rail transit. These findings shed new light on the determinants of air quality, and suggest that environmental impacts are important components of the social value of transportation infrastructure.

In order to cover their CO 2 emissions, power companies receive most of the required EU ETS allowances for free. In line with economic theory, these companies pass on the costs of these allowances in the price of electricity. This article analyses the implications of the EU ETS for the power sector, notably the impact of free allocation of CO 2 emission allowances on the price of electricity and the profitability of power generation. As well as some theoretical reflections, the article presents empirical and model estimates of CO 2 cost pass-through for Germany and The Netherlands, indicating that pass-through rates vary between 60 and 100% of CO 2 costs, depending on the carbon intensity of the marginal production unit and various other market-or technology-specific factors. As a result, power companies realize substantial windfall profits, as indicated by the empirical and model estimates presented in the article.

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