Deregulation and environmental differentiation in the electric utility industry
AbstractThis paper analyzes how economic deregulation impacts firm strategies and environmental quality in the electric utility industry. We find evidence that the deregulation introduced to this historically staid industry has stimulated environmental differentiation. Differentiation is most likely to appear where its point of uniqueness is valued by customers, and we confirm this relationship in our sample. Specifically, utilities that served customers who exhibited higher levels of environmental sensitivity generated more green power. The tendency for firms to differentiate in this way is lessened if they are relatively more dependent on coal-fired generation or relatively more efficient. Thus, there is evidence that firms sort themselves into either differentiation or low-cost strategies as the competitive realities of a deregulated world unfold. Deregulation and the ensuing environmental differentiation illustrate how utilities exploited formerly unmet customer demand for green power. The result has been greater levels of renewable generation and, hence, a cleaner environment.
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Bibliographic InfoPaper provided by Universidad Carlos III de Madrid in its series Open Access publications from Universidad Carlos III de Madrid with number info:hdl:10016/7749.
Length: 211 p.
Date of creation: 2007
Date of revision:
Publication status: Published in Strategic Management Journal (2007) v.Vol. 28, p.189-209
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Web page: http://www.uc3m.es
Deregulation; Environmental differentiation; Electric utility; Renewable energy; Productive efficiency;
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