Regulating Mismeasured Pollution: Implications of Firm Heterogeneity for Environmental Policy

19 Pages Posted: 17 Jan 2018 Last revised: 16 Mar 2018

See all articles by Eva Lyubich

Eva Lyubich

University of California, Berkeley

Joseph S. Shapiro

University of California, Berkeley; National Bureau of Economic Research (NBER)

Reed Walker

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

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Date Written: January 16, 2018

Abstract

This paper provides the first estimates of within-industry heterogeneity in energy and CO2 productivity for the entire U.S. manufacturing sector. We measure energy and CO2 productivity as output per dollar energy input or per ton CO2 emitted. Three findings emerge. First, within narrowly defined industries, heterogeneity in energy and CO2 productivity across plants is enormous. Second, heterogeneity in energy and CO2 productivity exceeds heterogeneity in most other productivity measures, like labor or total factor productivity. Third, heterogeneity in energy and CO2 productivity has important implications for environmental policies targeting industries rather than plants, including technology standards and carbon border adjustments.

JEL Classification: F18, F64, H23, Q56

Suggested Citation

Lyubich, Eva and Shapiro, Joseph S. and Walker, Reed, Regulating Mismeasured Pollution: Implications of Firm Heterogeneity for Environmental Policy (January 16, 2018). Cowles Foundation Discussion Paper No. 2117, Available at SSRN: https://ssrn.com/abstract=3103161 or http://dx.doi.org/10.2139/ssrn.3103161

Eva Lyubich

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Joseph S. Shapiro (Contact Author)

University of California, Berkeley ( email )

HOME PAGE: http://joseph-s-shapiro.com

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Reed Walker

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building
Berkeley, CA 94720
United States

HOME PAGE: http://faculty.haas.berkeley.edu/rwalker/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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