Seminar （Dept. of Trade Economics）

Theme：Estimation of Production Technologies with Output and Environmental Constraints

Speaker：Rong Luo (Renmin University of China)

Time：2020-09-29 14:00

Address：Room 1007, Mingde Business Building

Language：English/Chinese

ABSTRACT:

Plants in many industries minimize costs subject to constraints on output and emissions, which in turn restrict input choices. We develop a novel cost function approach to estimating their production function parameters, including generation productivity and pollution abatement efficiency terms to measure unobserved heterogeneity. Applying this technique to a panel of US coal-fired power plants, we model the firm's trade-off of sulfur and heat content to minimize the total costs of coal and pollution control. We find substantial heterogeneity and a marked increase in abatement productivity over time, consistent with the goals of the Acid Rain cap-and-trade program. Counterfactual analysis shows that its initial allocation of emission permits substantially affected costs, due to severe restrictions on permit trading.  

Estimation of Production Technologies with Output and Environmental Constraints.pdf