We study the optimal design of trade and industrial policy when governments pursue environmental objectives alongside traditional national welfare. Motivated by the global transition to electric vehicles (EVs) and growing concerns about competitiveness, resilience, and the environment, we develop a framework in which policymakers choose tariffs and domestic production subsidies to maximize national welfare, defined as the sum of consumer surplus, domestic profits, environmental benefits, and tariff revenue net of subsidies. We combine a theoretical model of differentiated-product oligopoly with a structural demand model estimated using vehicle-level data from 13 countries during 2004-2023 that together account for the vast majority of global EV sales. Our central finding is that the optimal policy combines a moderate tariff on imported EVs with a subsidy to domestic EV production financed through tariff revenue. This policy substantially outperforms both outright protectionism and laissez-faire. Relative to current policies, it preserves consumer access to affordable EVs, accelerates fleet electrification, supports domestic producers, and remains budget-neutral. For the United States, the optimal policy more than doubles EV market share, generates over $45 billion in annual welfare gains, and avoids approximately 95 million tons of lifetime CO2 emissions. A key mechanism underlying these results is the pass-through of tariffs and subsidies to prices, which depends critically on demand curvature, product substitution, and market structure. More broadly, our results suggest that effective industrial policy requires careful attention to market structure and country-specific conditions, balancing consumer, producer, fiscal, and environmental objectives rather than adhering to ideological prescriptions.

This paper exploits the universe of credit- and debit-card transactions in China during 2013–2015 and provides the first nationwide analysis of the health care cost of PM2.5 for a developing country. We leverage spatial spillovers of PM2.5 from long-range transport to generate exogenous variation in local pollution, and we employ a flexible distributed lag model to capture semiparametrically the dynamic response of pollution exposure. We find significant impacts of PM2.5 on health care spending in both the short and medium terms. A 10 g/m decrease in PM2.5 would reduce annual health care spending by over $9.2 billion, about 1.5% of China’s annual health care expenditure.

Policy experiments are crucial for fostering innovation and mitigating risks and can serve as catalysts for transformative changes. This study investigates the governance of policy experiments in China, focusing on how political factors shape their outcomes. It emphasizes the need to consider concurrent trials—related policy trials implemented simultaneously in a locality that can influence outcomes—when selecting comparable cases for analysis. Such consideration is critical, especially when the policy issue spans multiple sectors and the level of difficulty differs across sectors. By comparing five cities engaged in the same three decarbonization pilots between 2010 and 2015, Hangzhou and Xiamen are identified to have had similar initial conditions and goals but achieved divergent outcomes. This research uncovers the critical role of political leadership in achieving varying levels of decarbonization progress and identifies policy coherence with broader local priorities to be the key explanation for continued leadership attention and efforts devoted to decarbonization despite turnover. The study contributes to the literature by addressing the under-studied impact of political factors and concurrent trials, offering a replicable procedure for future research and practical policy applications.

In an era of disruptive global challenges, from climate crises to pandemics, understanding the drivers of drastic policy innovation is paramount. This study defines drastic policy innovation as a significant shift in governmental priorities through policies untried by most jurisdictions in a country. While policy entrepreneurs are often credited with initiating change, this study argues that political will is essential for enacting and implementing such innovative policies. Political will is defined as the degree of commitment among key decision makers to enact and implement specific policies. It is characterized by three key components: authority (the power to enact and enforce policy), capacity (the resources to implement it effectively), and legitimacy (the perceived rightfulness of actions by stakeholders). Through the case of low-carbon city experimentation in China, this study examines how political will drives the adoption and implementation of these policies. The findings reveal that a high level of political will is significantly linked to more drastically innovative policies being enacted and implemented and that when political will is institutionalized, implementation continues despite leadership turnover. These insights likely apply to other policy contexts and countries, regardless of regime type, albeit with some caveats.

As part of its effort to balance economic development with environmental objectives, China has established a new national park system, with the first five locations formally established in 2021. However, as the new parks all host or are proximate to human populations, aligning the socioeconomic needs and aspirations of local communities with conservation aims is critical for the long-term success of the parks. In this narrative review, the authors identify the ecological priorities and socioeconomic stakeholders of each of the five national parks; explore the tensions and synergies between these priorities and stakeholders; and synthesize the policy recommendations most frequently cited in the literature. A total of 119 studies were reviewed. Aligning traditional livelihoods with conservation, limiting road construction, promoting education and environmental awareness, and supporting the development of a sustainable tourism industry are identified as important steps to balance conservation with economic development in the new national parks.