Emissions Trading, Electricity Restructuring, and Investment in Pollution Abatement

Meredith Fowlie

American Economic Review, 2010, vol. 100, issue 3, 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)

JEL-codes: L51 L94 L98 Q53 Q58 (search for similar items in EconPapers)
Date: 2010
Note: DOI: 10.1257/aer.100.3.837
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Citations: View citations in EconPapers (117)

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