Estimating the Effects of Regulation When Treated and Control Firms Compete: A New Method with Application to the EU ETS

Geoffrey Barrows, Raphael Calel, Martin Jégard and Hélène Ollivier

No 10438, CESifo Working Paper Series from CESifo

Abstract: This paper presents a method for estimating treatment effects of regulations when treated and control firms compete on the output market. We develop a GMM estimator that recovers reduced-form parameters consistent with a model of differentiated product markets with multi-plant firms, and use these estimates to evaluate counterfactual revenues and emissions. Our procedure recovers unbiased estimates of treatment effects in Monte Carlo experiments, while difference-in-differences estimators and other popular methods do not. In an application, we find that the European carbon market reduced emissions at regulated plants without undermining revenues of regulated firms, relative to an unregulated counterfactual.

Keywords: regulation; spillovers; environment; energy; firms (search for similar items in EconPapers)
JEL-codes: L10 L50 Q48 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-ene, nep-env and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Estimating the Effects of Regulation When Treated and Control Firms Compete: A New Method with Application to the EU ETS (2024)
Working Paper: Estimating the effects of regulation when treated and control firms compete: a new method with application to the EU ETS (2023)
Working Paper: Estimating the effects of regulation when treated and control firms compete: a new method with application to the EU ETS (2023)
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