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INFORMATION DISCLOSURE POLICIES: EVIDENCE FROM THE ELECTRICITY INDUSTRY
Author(s) -
DELMAS MAGALI,
MONTESSANCHO MARIA J.,
SHIMSHACK JAY P.
Publication year - 2010
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.2009.00227.x
Subject(s) - unintended consequences , electricity , economics , welfare , marginal cost , fossil fuel , clean energy , clean air act , microeconomics , natural resource economics , public economics , business , air pollution , market economy , ecology , chemistry , electrical engineering , biology , engineering , organic chemistry , political science , law
While theory suggests that information programs may correct market failures and improve welfare, the empirical impacts of these policies remain undetermined. We show that mandatory disclosure programs in the electricity industry achieve stated policy goals. We find that the proportion of fossil fuels decreases, and the proportion of clean fuels increases in response to disclosure programs. However, the programs may produce unintended consequences. For example, programs may make “clean” firms cleaner, while leaving “dirty” firms relatively unchanged. If the marginal benefits of pollution abatement are larger at dirty firms than at clean firms, disclosure programs may induce inefficient abatement allocations. ( JEL D83, Q58, D21)