Policy Uncertainty in the Market for Coal Electricity: The Case of Air Toxics Standards

• 成果类型: Article
• 署名作者: Gowrisankaran, Gautam; Langer, Ashley; Zhang, Wendan
• 署名单位: Center for Economic & Policy Research (CEPR); Columbia University; National Bureau of Economic Research; University of Arizona; Renmin University of China
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/734779
• 发表日期: 2025
• 页码: 1757-1795
• 关键词: investment; COSTS; FRAMEWORK; OIL

摘要

Government policy uncertainty affects irreversible decisions including technology adoption and exit. This paper quantifies uncertainty surrounding the Mercury and Air Toxics Standards (MATS). We estimate a dynamic oligopoly model for coal-fired electricity generators that recovers generators' beliefs regarding future MATS enforcement. We develop the approximate belief oligopoly equilibrium concept, where players understand that their decisions impact aggregate market states. MATS enforcement created substantial uncertainty: the perceived enforcement probability dropped to 43%. Resolving uncertainty early would increase profits by $1.39 billion but also increase pollution costs by $0.652-$1.776 billion. Had exit been unlikely, resolving uncertainty early would have decreased pollution.