The effect of cap-and-trade programs on firms' profits: Evidence from the Nitrogen Oxides Budget Trading Program
Cap-and-trade programs have become an increasingly common means of regulating emissions from electric power plants, but there is little empirical evidence about the programs' effects on regulated firms' profits. This paper uses stock prices to estimate the change in expected profits under the Nitrogen Oxides Budget Trading Program (NBP). Using regional variation in compliance costs, I find that the NBP reduced expected profits by as much as $25 billion, primarily affecting the values of coal generators that operate in states with restructured electricity markets.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Erin T. Mansur, 2007. "DO OLIGOPOLISTS POLLUTE LESS? EVIDENCE FROM A RESTRUCTURED ELECTRICITY MARKET -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 55(4), pages 661-689, December.
- Greenstone, Michael & Oyer, Paul & Vissing-Jorgensen, Annette, 2005.
"Mandated Disclosure, Stock Returns, and the 1964 Securities Acts Amendments,"
1869r, Stanford University, Graduate School of Business.
- Michael Greenstone & Paul Oyer & Annette Vissing-Jorgensen, 2006. "Mandated Disclosure, Stock Returns, and the 1964 Securities Acts Amendments," The Quarterly Journal of Economics, Oxford University Press, vol. 121(2), pages 399-460.
- Michael Greenstone & Paul Oyer & Annette Vissing-Jorgensen, 2005. "Mandated Disclosure, Stock Returns, and the 1964 Securities Acts Amendments," NBER Working Papers 11478, National Bureau of Economic Research, Inc.
- Paul Oyer, . "Mandated Disclosure, Stock Returns, and the 1964 Securities Acts Amendments," American Law & Economics Association Annual Meetings 1019, American Law & Economics Association.
- Severin Borenstein & James B. Bushnell & Frank A. Wolak, 2002. "Measuring Market Inefficiencies in California's Restructured Wholesale Electricity Market," American Economic Review, American Economic Association, vol. 92(5), pages 1376-1405, December.
- Farrell, Alex, 2000. "The NOx Budget: A Look at the First Year," The Electricity Journal, Elsevier, vol. 13(2), pages 83-93, March.
- A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March.
- Burtraw, Dallas & Palmer, Karen & Cropper, Maureen & Carlson, Curtis, 1998.
"Sulfur-Dioxide Control By Electric Utilities: What Are the Gains from Trade?,"
dp-98-44-rev, Resources For the Future.
- Curtis Carlson & Dallas Burtraw & Maureen Cropper & Karen L. Palmer, 2000. "Sulfur Dioxide Control by Electric Utilities: What Are the Gains from Trade?," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1292-1326, December.
- Carlson, Curtis & Burtraw, Dallas & Cropper, Maureen & Palmer, Karen L., 1998. "Sulfur dioxide control by electric utilities : what are the gains from trade?," Policy Research Working Paper Series 1966, The World Bank.
- Joshua Linn, 2008. "Technological Modifications in the Nitrogen Oxides Tradable Permit Program," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 153-176.
- Ian Lange & Joshua Linn, 2008.
"Bush v. Gore and the Effect of New Source Review on Power Plant Emissions,"
Environmental & Resource Economics,
Springer;European Association of Environmental and Resource Economists, vol. 40(4), pages 571-591, August.
- Ian Lange & Josh Linn, 2006. "Bush v. Gore and the Effect of New Source Review on Power Plant Emissions," Working Papers UWEC-2007-02, University of Washington, Department of Economics.
- Salinger, Michael, 1992. "Standard Errors in Event Studies," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 27(01), pages 39-53, March.
- Krupnick, Alan & McConnell, Virginia & Stoessell, Terrell & Cannon, Matthew & Batz, Michael, 2000. "Cost-Effective NOx Control in the Eastern United States," Discussion Papers dp-00-18, Resources For the Future.
- Burtraw, Dallas & Palmer, Karen & Bharvirkar, Ranjit & Paul, Anthony, 2001. "Restructuring and Cost of Reducing NOx Emissions in Electricity Generation," Discussion Papers dp-01-10-rev, Resources For the Future.
- Boehmer, Ekkehart & Masumeci, Jim & Poulsen, Annette B., 1991. "Event-study methodology under conditions of event-induced variance," Journal of Financial Economics, Elsevier, vol. 30(2), pages 253-272, December.
- Mark L. Mitchell & Erik Stafford, 1997.
"Managerial Decisions and Long-Term Stock Price Performance,"
CRSP working papers
453, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Mitchell, Mark L & Stafford, Erik, 2000. "Managerial Decisions and Long-Term Stock Price Performance," The Journal of Business, University of Chicago Press, vol. 73(3), pages 287-329, July.
- Erin T. Mansur, 2007. "Do Oligopolists Pollute Less? Evidence from a Restructured Electricity Market," NBER Working Papers 13511, National Bureau of Economic Research, Inc.
- Kira Markiewicz & Nancy L. Rose & Catherine Wolfram, 2004.
"Do Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on U.S. Electric Generation Efficiency,"
NBER Working Papers
11001, National Bureau of Economic Research, Inc.
- Kira R. Fabrizio & Nancy L. Rose & Catherine D. Wolfram, 2007. "Do Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on US Electric Generation Efficiency," American Economic Review, American Economic Association, vol. 97(4), pages 1250-1277, September.
- Fama, Eugene F. & French, Kenneth R., 1993. "Common risk factors in the returns on stocks and bonds," Journal of Financial Economics, Elsevier, vol. 33(1), pages 3-56, February.
- Ellison, Sara Fisher & Mullin, Wallace P, 2001. "Gradual Incorporation of Information: Pharmaceutical Stocks and the Evolution of President Clinton's Health Care Reform," Journal of Law and Economics, University of Chicago Press, vol. 44(1), pages 89-129, April.
When requesting a correction, please mention this item's handle: RePEc:eee:jeeman:v:59:y:2010:i:1:p:1-14. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.