Key contributions:"Abstract: I describe standard macroeconomic methods for assessing the effects of policy on allocations and welfare. I then embed a version of a benchmark industry equilibrium model into an otherwise standard version of the one sector growth model and describe how this setting provides a useful structure for the analysis of environmental regulations that impact on one particular sector but which might reasonably have important aggregate effects."
It is a comprehensive review of two standard macroeconomic models that are commonly used to analyze policies and welfare in any context: A general equilibrium, the one sector growth model, and a partial equilibrium, the industry equilibrium model based on Hopenhayn(1992). And then he combines the models. Environmental Regulations are an application on where you can use this type of frameworks.
Key weaknesses:
One key effect that is recognized in the literature as an important economic effect of environmental regulations is the welfare effects of job layoffs and the transitional costs of finding a new job. Is important to acknowledge that he recognizes it, and mentions, in section 4.4, as the natural extension of his paper.
Possible Extensions:
Given what I expressed in the last point and as he mentions in the paper the most important extension is to include features that help to measure the welfare effects of the sectoral reallocation of workers.
