Profiting from Regulation: An Event Study of the EU Carbon Market

James Bushnell, Erin Mansur and Howard Chong ()

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: We investigate the effect of cap-and-trade regulation of CO2 on firm profits by performing an event study of a CO2 price crash in the EU market. We examine returns for 90 stocks from carbon intensive industries and 600 stocks in the broad EUROSTOXX index. Firms in carbon intensive, or electricity intensive industries, but not involved in international trade were most hurt by the event. This implies investors were focused on product price impacts, rather than compliance costs. We find evidence that firms' net allowance positions also strongly influenced the share price response to the decline in allowance prices.

Keywords: Emissions Markets; Incidence of Taxation; Event Study (search for similar items in EconPapers)
JEL-codes: G14 H22 H23 Q50 Q54 (search for similar items in EconPapers)
Date: 2010-12-15
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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http://www2.econ.iastate.edu/papers/p12737-2011-04-06.pdf (application/pdf)

Related works:
Working Paper: Profiting from regulation: an event study of the EU carbon market (2011)
Working Paper: Profiting from Regulation: An Event Study of the EU Carbon Market (2009)
Working Paper: Profiting from Regulation: An Event Study of the EU Carbon Market (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:32737

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