Teaching an old dog new tricks: Firm learning from environmental regulation

Emily Galloway and Erik Paul Johnson

Energy Economics, 2016, vol. 59, issue C, 1-10

Abstract: We examine a new mechanism by which environmental regulation can increase efficiency: intra-firm knowledge spillovers due to environmental regulation. County-level non-attainment of the National Ambient Air Quality Standards creates spatial variation in the degree of regulatory stringency, as states impose stronger environmental regulation in non-attainment counties. We use this spatial variation to examine how the efficiency of electricity generators responds to increases in regulation. We show that, in response to increased regulatory stringency, electricity generators find technical efficiency enhancements and then transfer these enhancements to other units within their fleet. We find that a change in regulatory stringency translates to within-firm spillovers of 3–4%, and that these gains occur at least 3years after the increase in regulatory stringency.

Keywords: Firm learning; Environmental regulation; Clean Air Acts; Electricity generation; Process innovation; Technical efficiency (search for similar items in EconPapers)
JEL-codes: L51 L94 Q48 Q58 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:59:y:2016:i:c:p:1-10

DOI: 10.1016/j.eneco.2016.06.023

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