ESTIMATION OF PRODUCTION TECHNOLOGIES WITH OUTPUT AND ENVIRONMENTAL CONSTRAINTS

Coal‐fired power plants minimize costs subject to output and emission constraints. We model the plants' choice of coal quality and emission abatement to minimize costs under these constraints, allowing for heterogeneous unobserved generation productivity and abatement efficiency. We derive and...

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Published inInternational economic review (Philadelphia) Vol. 65; no. 2; pp. 755 - 780
Main Authors Atkinson, Scott E., Luo, Rong
Format Journal Article
LanguageEnglish
Published Philadelphia Blackwell Publishing Ltd 01.05.2024
Subjects
Acid rain
Coal
Coal-fired power plants
Electricity generation
Emissions
Power
Power plants
Productivity
United States > US
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Summary:Coal‐fired power plants minimize costs subject to output and emission constraints. We model the plants' choice of coal quality and emission abatement to minimize costs under these constraints, allowing for heterogeneous unobserved generation productivity and abatement efficiency. We derive and estimate the plants' cost functions to recover the production technologies. Our data set is a balanced panel of 76 U.S. coal‐fired power plants from 1995 to 2005, when the emission permit trading system was viable. We find a dramatic growth in abatement efficiency, a major goal of the Acid Rain Program. By contrast, the growth in generation productivity is positive but small.
Bibliography:ObjectType-Article-1
SourceType-Scholarly Journals-1
ObjectType-Feature-2
content type line 14
ISSN:0020-6598
1468-2354
DOI:10.1111/iere.12675