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Costly Blackouts? Measuring Productivity and Environmental Effects of Electricity Shortages

30 Pages Posted: 2 Jan 2012  

Karen Fisher-Vanden

Pennsylvania State University

Erin T. Mansur

Tuck School of Business at Dartmouth; National Bureau of Economic Research (NBER)

Qiong (Juliana) Wang

University of Southern California

Multiple version iconThere are 2 versions of this paper

Date Written: December 30, 2011

Abstract

In many countries, unreliable inputs, particularly those lacking storage, can significantly limit a firm's productivity. We examine industrial enterprises response to China's severe power shortages around 2003. Fast-growing demand coupled with regulated electricity prices led to blackouts varying over location and time. Our results suggest that enterprises shift from energy (both electric and non-electric sources) into materials - a shift from "make" to "buy." Textiles, timber, chemicals, and metals exhibit the largest effects. Contrary to the literature, we do not find greater self generation. We find that these productivity changes, while costly to firms, led to small reductions in carbon emissions.

Keywords: Productivity, Electricity, Blackouts, China

JEL Classification: D24, Q4, P2, L9

Suggested Citation

Fisher-Vanden, Karen and Mansur, Erin T. and Wang, Qiong (Juliana), Costly Blackouts? Measuring Productivity and Environmental Effects of Electricity Shortages (December 30, 2011). Available at SSRN: https://ssrn.com/abstract=1978446 or http://dx.doi.org/10.2139/ssrn.1978446

Karen Fisher-Vanden

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Erin T. Mansur (Contact Author)

Tuck School of Business at Dartmouth ( email )

Hanover, NH 03755
United States
603 646 2398 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Qiong (Juliana) Wang

University of Southern California ( email )

Los Angeles, CA 90089
United States

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