The EU-ETS imposes a carbon price on large firms engaged in, among other industries, industrial manufacturing, including the production of cement, metals, and chemicals. How can regulated firms respond to these emissions prices? Firms may reduce output, shift inputs, or invest in green technologies. The sum of these responses in emissions comprises the marginal abatement cost curve (MACC) for the firm or industry in question. We develop a novel
methodology for estimating MACCs using micro-data from French manufacturing firms. Credible estimation of MACCs is critical for environmental policy: without it, governments and policymakers cannot compare costs of environmental regulation with the benefits of it (as captured in the social cost of carbon).
Marginal Abatement Costs Curves, Productivity, and the EU-ETS
Data provided through CASD (19)
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