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
LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library
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)
Pages: 84 pages
Date: 2023-05-18
New Economics Papers: this item is included in nep-com, nep-ecm and nep-env
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Citations: View citations in EconPapers (1)
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http://eprints.lse.ac.uk/119259/ Open access version. (application/pdf)
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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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:119259
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