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Ciclo seminarios CEA – MIPP


13:00 horas, Sala Consejo, Beauchef 851, Torre Oriente (3er piso)

El Centro de Economía Aplicada (CEA) y el Instituto Milenio para la Investigación en Imperfecciones de Mercado y Políticas Públicas (MIPP) de la Universidad de Chile invitan a su ciclo de seminarios programados para el primer semestre del año.

Invitado: Andre Trindade, Getulio Vargas Foundation (FGV),  Graduate School of Economics (EPGE)

“Coordinating Separate Markets for Externalities”

We show that inefficiencies from having separate markets to correct an environmental externality are significantly mitigated when firms participate in an integrated product market. Firms take into account the distribution of externality prices and reallocate output from markets with high prices to markets with low prices. Investment in cleaner and more efficient capacity serves as an additional mechanism to reallocate output, which increases the marginal benefit of investment, and consequently improves longer-term outcomes. Using data from an integrated wholesale electricity market, we estimate a dynamic structural model of production and investment to bound the loss from separate markets for carbon dioxide emissions, and quantify the extent to which optimal investment can compensate for the loss. Despite the lack of the “invisible hand” of a single emissions market, profit-maximizing firms can play a crucial role in coordinating otherwise uncoordinated environmental regulations. Keywords: Incomplete regulation, Investment, Emissions, Energy, Externalities)

Confirmaciones: Olga Barrera / obarrera@dii.uchile.cl