Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279187 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10438
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper presents a method for estimating treatment effects of regulations when treated and control firms compete on the output market. We develop a GMM estimator that recovers reduced-form parameters consistent with a model of differentiated product markets with multi-plant firms, and use these estimates to evaluate counterfactual revenues and emissions. Our procedure recovers unbiased estimates of treatment effects in Monte Carlo experiments, while difference-in-differences estimators and other popular methods do not. In an application, we find that the European carbon market reduced emissions at regulated plants without undermining revenues of regulated firms, relative to an unregulated counterfactual.
Subjects: 
regulation
spillovers
environment
energy
firms
JEL: 
Q48
L10
L50
Document Type: 
Working Paper
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