Industry Profits, Stock Prices and Household Burdens: A Distributional Analysis of the Kerry-Boxer Cap-and-Trade Bill

Abstract:     
Using an input-output model of the U.S. economy, we estimate the distributional impact of the “Clean Energy Jobs and American Power Act” (S. 1733) on short-run profits and stock prices of a representative sample of electricity, natural gas, and petroleum refining firms, and the long-run impact on U.S. households. We find the bill significantly increases profits for electricity and natural gas distributors, raising stock prices by up to 34 percent in some scenarios. By contrast, profits for petroleum refiners would fall sharply with large and mid-sized refiners losing up to 82 percent of stock value. For households, we estimate the bill would impose a gross burden of $113.8 billion per year or $947 per household, ranging from 4.4 percent of income for low-income households to 1.0 percent for upper-income households. These costs would fall disproportionately on families under age 25 and over 75, those in Midwestern states, and single parents with dependent children.

Number of Pages in PDF File: 60

Keywords: Distributional analysis, cap-and-trade, environmental policy, policy analysis

JEL Classification: H23, K20

working papers series