Emissions Trading, Electricity Restructuring, and Investment in Pollution Abatement
- (pp. 837-69)
Abstract
This paper analyzes an emissions trading program that was introduced to reduce smog-causing pollution from large stationary sources. Using variation in state level electricity industry restructuring activity, I identify the effect of economic regulation on pollution permit market outcomes. There are two main findings. First, deregulated plants in restructured electricity markets were less likely to adopt more capital intensive environmental compliance options as compared to regulated or publicly owned plants. Second, as a consequence of heterogeneity in electricity market regulations, a larger share of the permitted pollution is being emitted in states where air quality problems tend to be more severe. (JEL L51, L94, L98, Q53, Q58)Citation
Fowlie, Meredith. 2010. "Emissions Trading, Electricity Restructuring, and Investment in Pollution Abatement." American Economic Review, 100 (3): 837-69. DOI: 10.1257/aer.100.3.837Additional Materials
JEL Classification
- L51 Economics of Regulation
- L94 Electric Utilities
- L98 Industry Studies: Utilities and Transportation: Government Policy
- Q53 Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
- Q58 Environmental Economics: Government Policy