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Real effects of climate policy : financial constraints and spillovers
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Bartram, Söhnke M., Hou, Kewei and Kim, Sung Wook (2021) Real effects of climate policy : financial constraints and spillovers. Journal of Financial Economics . doi:10.1016/j.jfineco.2021.06.015 (In Press)
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Official URL: https://doi.org/10.1016/j.jfineco.2021.06.015
Abstract
We document that localized policies aimed at mitigating climate risk can have unintended consequences due to regulatory arbitrage by firms. Using a difference-in-differences framework to study the impact of the California cap-and-trade program with U.S. plant-level data, we show that financially constrained firms shift emissions and output from California to other states where they have similar plants that are underutilized. By contrast, unconstrained firms do not make such adjustments. Overall, unconstrained firms do not reduce their total emissions, whereas constrained firms increase their total emissions after the cap-and-trade rule, undermining the effectiveness of the policy.
| Item Type: | Journal Article | |||||||||||||||
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| Subjects: | G Geography. Anthropology. Recreation > GE Environmental Sciences H Social Sciences > HC Economic History and Conditions Q Science > QC Physics |
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| Divisions: | Faculty of Social Sciences > Warwick Business School | |||||||||||||||
| Library of Congress Subject Headings (LCSH): | Climatic changes -- Economic aspects, Environmental policy -- Econometric models, Emissions trading -- California, Finance -- Environmental aspects, Environmental economics | |||||||||||||||
| Journal or Publication Title: | Journal of Financial Economics | |||||||||||||||
| Publisher: | Elsevier Science BV | |||||||||||||||
| ISSN: | 0304-405X | |||||||||||||||
| Official Date: | 2021 | |||||||||||||||
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| DOI: | 10.1016/j.jfineco.2021.06.015 | |||||||||||||||
| Status: | Peer Reviewed | |||||||||||||||
| Publication Status: | In Press | |||||||||||||||
| Access rights to Published version: | Restricted or Subscription Access | |||||||||||||||
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