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Does regulation stimulate productivity? The effect of air quality policies on the efficiency of US power plants
Authors:Rachel Fleishman  Rob Alexander  Stuart Bretschneider  David Popp  
Affiliation:1. Department of Public Administration, the Maxwell School, Syracuse University, 215 Eggers Hall, Syracuse, NY 13244, United States;2. Department of Public Administration, Center for Environmental Policy and Administration, the Maxwell School, 419 Crouse-Hinds Hall, Syracuse, NY 13244, United States;3. Department of Public Administration, the Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244, United States;4. National Bureau of Economic Research, Cambridge, MA 02138, United States
Abstract:This research examines the effect of air quality regulations on the productivity of US power plants based on both economic and environmental outputs. Using data envelopment analysis (DEA) to estimate an efficiency measure incorporating both economic and environmental outcomes, we look at changes in efficiency in US power plants over an eleven-year time period (1994–2004) during which several different regulations were implemented for the control of nitrogen oxides (NOx) and sulfur dioxide (SO2). The paper then models how estimated efficiency behaves over time as a function of regulatory changes. Findings suggest mixed effects of regulations on power plant efficiency when pollution abatement and electricity generation are both included as outputs.
Keywords:Data envelopment analysis  Air pollution  Regulation
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