Rebecca DeSimone - London Business School

"Opening the Brown Box: Production Responses to Environmental Regulation", w/ Lakshmi Naaraayanan (LBS) and Kunal Sachdeva (Rice University)

Abstract

We study production responses to an emission capping regulation on manufacturing firms. We find that firms reduce pollution by electrifying their production, producing less coal-intensive products, and increasing their abatement expenditures. Firms preserve profitability by increasing their production of higher-margin products. However, firms in highly polluting industries produce fewer products. In the aggregate, we document lower product variety, an altered firm-size distribution, and lower business formation. Our findings highlight the mechanisms behind how mandated pollution reduction can be effective and its costs, suggesting a loss in agglomeration externalities.

Additional information:

  • Speaker: Rebecca DeSimone
  • Time: Wednesday, 17.04.2024, 14:45 - 16:00
  • Location: Faculty Lounge, Room 0.036
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  • Organizer: Finance Group
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