The impacts of the EU ETS on efficiency and economic performance – An empirical analyses for German manufacturing firms

Andreas Löschel, Benjamin Johannes Lutz and Shunsuke Managi

Resource and Energy Economics, 2019, vol. 56, issue C, 71-95

Abstract: We investigate the effect of the European Union Emissions Trading System (EU ETS) on the economic performance of manufacturing firms in Germany. Our difference-in-differences framework relies on several parametric conditioning strategies and nearest neighbor matching. As a measure of economic performance, we use the firm specific distance to the stochastic production frontier recovered from official German production census data. None of our identification strategies provide evidence for a statistically significant negative effect of emissions trading on economic performance. On the contrary, the results of the nearest neighbor matching suggest that the EU ETS rather had a positive impact on the economic performance of the regulated firms, especially during the first compliance period. A subsample analysis confirms that EU ETS increased the efficiency of treated firms in at least some two-digit industries.

Keywords: Control of externalities; Emissions trading; Economic performance; Manufacturing; Difference-in-differences; Nearest neighbor matching; Stochastic production frontier (search for similar items in EconPapers)
JEL-codes: D22 Q38 Q48 Q52 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (41)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:56:y:2019:i:c:p:71-95

DOI: 10.1016/j.reseneeco.2018.03.001

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