Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/30297.html
   My bibliography  Save this paper

Policy Uncertainty in the Market for Coal Electricity: The Case of Air Toxics Standards

Author

Listed:
  • Gautam Gowrisankaran
  • Ashley Langer
  • Wendan Zhang
Abstract
Government policy uncertainty affects irreversible decisions including technology adoption and exit. This paper quantifies uncertainty surrounding the Mercury and Air Toxics Standard (MATS). We estimate a dynamic oligopoly model for coal-fired electricity generators that recovers generators' beliefs regarding future MATS enforcement. We develop the Approximate Belief Oligopoly Equilibrium concept where players understand that their decisions impact aggregate market states. MATS enforcement created substantial uncertainty: the perceived enforcement probability dropped to 43%. Resolving uncertainty early would increase profits by $1.39 billion but also pollution costs by $0.652–1.776 billion. Had exit been unlikely, resolving uncertainty early would have decreased pollution.

Suggested Citation

  • Gautam Gowrisankaran & Ashley Langer & Wendan Zhang, 2022. "Policy Uncertainty in the Market for Coal Electricity: The Case of Air Toxics Standards," NBER Working Papers 30297, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30297
    Note: EEE IO
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w30297.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vehviläinen, Iivo, 2023. "Greed is good? Of equilibrium impacts in environmental regulation," Journal of Environmental Economics and Management, Elsevier, vol. 122(C).
    2. Sears, Louis S. & Lawell, C.Y. Cynthia Lin & Torres, Gerald & Walter, M. Todd, 2022. "Moment-based Markov Equilibrium Estimation of High-Dimension Dynamic Games: An Application to Groundwater Management in California," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322187, Agricultural and Applied Economics Association.
    3. Michele Fioretti & Junnan He & Jorge Tamayo, 2024. "Prices and Concentration: A U-shape? Theory and Evidence from Renewables," Papers 2407.03504, arXiv.org.

    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:30297. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.