In addition to the most pressing issues of the day, scholars at the Freeman Spogli Institute for International Studies focus their research on many regions of the world, from Beijing to Brazil.
Research Spotlight
The Ripple Effects of China’s College Expansion on American Universities
Researchers at SCCEI trace how China’s unprecedented expansion of higher education has impacted U.S. graduate education and local economies surrounding college towns.
While Nayib Bukele's style of authoritarianism may have some successes on paper, Beatriz Magaloni and Alberto Diaz-Cayeros argue that the regime is headed for a reckoning.
Time for Iran to Make a No-enrichment Nuclear Deal
The time has come for Iran’s leaders to reconsider their past intransigent, deceptive posture and instead pursue a nuclear power program that will benefit the Iranian people, write Abbas Milani and Siegfried Hecker.
National Bureau of Economic Research,
June 13, 2026
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.
