Presented By: Department of Economics
Michael Beauregard Seminar in Macroeconomics: Regulating Conglomerates: Evidence from an Energy Conservation Problem in China
Juan Carlos Suarez Serrat, Duke University
Abstract:
How does energy regulation affect production and energy use within conglomerates? We study the effects of a prominent program aimed at reducing the energy use of large Chinese companies. Difference-in-differences analyses show that regulated firms significantly reduce their energy consumption and output but do not increase their energy efficiency. Using detailed business registration data, we link regulated firms to non-regulated firms that are part of the same conglomerate. We estimate large spillovers on cross-owned non-regulated firms, which increase both output and energy use. We then specify and calibrate a model of conglomerate production that fits our setting and the estimated effects of the regulation. The model quantifies the importance of conglomerate reallocation for aggregate outcomes, the shadow cost of the regulation, and the efficiency gains from using public information on business networks to improve the design of energy regulation.
* To join the seminar, please contact at econ.events@umich.edu
How does energy regulation affect production and energy use within conglomerates? We study the effects of a prominent program aimed at reducing the energy use of large Chinese companies. Difference-in-differences analyses show that regulated firms significantly reduce their energy consumption and output but do not increase their energy efficiency. Using detailed business registration data, we link regulated firms to non-regulated firms that are part of the same conglomerate. We estimate large spillovers on cross-owned non-regulated firms, which increase both output and energy use. We then specify and calibrate a model of conglomerate production that fits our setting and the estimated effects of the regulation. The model quantifies the importance of conglomerate reallocation for aggregate outcomes, the shadow cost of the regulation, and the efficiency gains from using public information on business networks to improve the design of energy regulation.
* To join the seminar, please contact at econ.events@umich.edu
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