Oligopolies And Pollution: Mansur's Insight

Erin Mansur is an economist whose research focuses on the environmental implications of market power in the electricity industry. In her paper Do Oligopolists Pollute Less?, Mansur explores the impact of electricity restructuring on market power and pollution levels. She finds that strategic firms reduced their emissions by approximately 20% relative to other firms and their own historic emissions. This paper contributes to Mansur's broader body of work on energy markets, environmental regulation, and pollution, including studies on the impact of electric vehicles, carbon pollution standards, and energy prices on the environment.

Electricity restructuring and market power

Erin T. Mansur's work on the topic of oligopolies and pollution covers the impact of electricity restructuring and market power on the environment. Electricity restructuring has given producers the opportunity to exercise market power and affect output decisions, which can lead to cross-firm production inefficiencies. Mansur's research focuses on the environmental implications of these production inefficiencies, specifically in the electricity markets of Pennsylvania, New Jersey, and Maryland.

In an oligopoly market with environmental regulation through tradable pollution permits, the output decisions of polluters influence the price of polluting. Mansur's work examines the feedback effect of this dynamic, finding that it increases strategic firms' production and improves welfare. The introduction of tradable pollution permits in 1999, alongside electricity restructuring, led to a substantial decrease in air pollution in these states. Interestingly, 33-42% of the emissions reductions were attributed to strategic behaviour in the electricity market.

The study also compares the observed behaviour of firms with estimates of production and emissions in a competitive market. Mansur finds that strategic firms reduced their emissions by approximately 20% relative to other firms and their own historical emissions. This indicates that market power can have a significant impact on environmental outcomes.

Furthermore, Mansur's work contributes to the discussion on the regulation of oligopoly markets. By comparing the effects of a pollution tax versus tradable permits, the study provides insights into the complex relationship between economic regulation and firms' long-run responses to incentives. The findings suggest that a pollution tax may have resulted in a seven percent greater welfare loss compared to the tradable permit system.

Overall, Erin T. Mansur's research on electricity restructuring and market power highlights the interplay between economic incentives, market structure, and environmental outcomes. The study provides valuable insights into the complex dynamics of oligopoly markets and their impact on pollution and welfare.

Environmental regulation

Erin Mansur's paper, "Do Oligopolists Pollute Less? Evidence from a Restructured Electricity Market", explores the impact of electricity market restructuring on pollution levels and the role of strategic firms in reducing emissions. The paper, published in the Journal of Industrial Economics in 2007, contributes to the ongoing discussion on environmental regulation in oligopoly markets.

Oligopolies and environmental regulation:

Oligopoly refers to a market structure where a small number of firms dominate, often leading to high barriers to entry for new competitors. In her paper, Mansur investigates the impact of oligopolies on pollution levels, specifically in the context of the electricity market. Restructuring in the electricity industry has provided producers with the opportunity to exert market power by influencing prices and output decisions, potentially affecting production efficiency and environmental outcomes.

The impact of changing costs and market power on pollution reductions:

Mansur's analysis also attributes pollution reductions to changing costs and the exercise of market power by firms. According to a competitive behaviour model, changing costs explain about two-thirds of the observed pollution reductions, while the remaining one-third is linked to firms' market power. This highlights the complex interplay between market dynamics and environmental outcomes in oligopoly markets.

Furthermore, Mansur's research extends beyond pollution levels and includes publications on related topics such as the costs and benefits of reducing air pollutants related to acid rain, upstream versus downstream implementation of climate policy, and the impact of local energy prices and regulation on employment concentration.

Overall, Mansur's work provides valuable insights into the complex relationship between oligopolies, environmental regulation, and pollution levels. It underscores the importance of effective regulatory frameworks in mitigating the environmental impact of strategic firms and improving overall environmental outcomes.

Competitive behaviour and costs

Erin Mansur's paper, "Do Oligopolists Pollute Less? Evidence from a Restructured Electricity Market," explores the competitive behaviour and costs associated with oligopolies and their impact on pollution levels. The paper focuses on the electricity market in Maryland, where electricity restructuring and new environmental regulations led to a significant decrease in air pollution in 1999.

One key aspect of competitive behaviour in oligopoly markets is the exercise of market power by firms. Oligopolists can increase prices by distorting output decisions, leading to cross-firm production inefficiencies. In the context of pollution, strategic firms may reduce their emissions relative to other firms and their historical emissions by taking advantage of market power. This was observed in Mansur's study, where strategic firms in the Maryland electricity market reduced emissions by approximately 20%.

Changing costs are another important factor in competitive behaviour. According to a model of competitive behaviour, changing costs can explain about two-thirds of the observed pollution reductions. This suggests that firms may be incentivised to reduce pollution when the costs of pollution abatement decrease or when the costs of polluting become higher. For instance, the implementation of carbon pollution standards or carbon markets can influence the costs associated with pollution and drive firms to reduce their emissions.

The interaction between competition and environmental regulation in oligopoly markets is also examined by Mansur in the paper "Prices vs. Quantities: Environmental Regulation and Imperfect Competition". This paper explores the impact of different policy approaches, such as setting prices or quantities, on pollution levels in markets with imperfect competition. The study considers the effects of these policies on firms' production and emission decisions, providing insights into the complex relationship between competitive behaviour, costs, and pollution in oligopolistic markets.

Furthermore, Mansur's research also delves into the costs and benefits associated with reducing air pollutants related to acid rain. By analysing the economic impacts of implementing climate policies, Mansur and co-authors provide a comprehensive understanding of the trade-offs involved in pollution reduction efforts. This includes evaluating the costs of abatement technologies, the potential for renewable energy sources, and the distribution of costs and benefits across different sectors and regions.

Air pollution and emissions

Mansur's research also delves into the regulatory aspect of air pollution and emissions. In her paper "Prices vs. Quantities: Environmental Regulation and Imperfect Competition," she examines the impact of environmental regulation on pollution levels. She finds that electricity restructuring and new environmental regulations can lead to substantial reductions in air pollution. Mansur also investigates the stringency of the EPA's proposed carbon pollution standards for new power plants, evaluating the potential impact on the energy sector.

Furthermore, Mansur's work on electric vehicle adoption and its environmental implications is noteworthy. In a paper published in the Journal of the Association of Environmental and Resource Economists, she explores the distributional effects of air pollution from electric vehicle adoption. This research contributes to the understanding of the complex relationship between technology, energy use, and air quality.

Mansur's publications also include studies on the costs and benefits of reducing air pollutants related to acid rain. She co-authored a paper in 1998, titled "Costs and Benefits of Reducing Air Pollutants Related to Acid Rain," which appeared in Contemporary Economic Policy. This work likely provided valuable insights into the economic considerations surrounding air pollution reduction strategies.

Overall, Erin Mansur's research makes significant contributions to the understanding of air pollution and emissions, particularly in the context of market power, regulatory impacts, electric vehicle adoption, and the costs and benefits associated with reducing air pollutants. Her work provides valuable insights into the complex dynamics between economic factors and environmental outcomes.

Oligopolists' output decisions

Erin Mansur's paper, "Do Oligopolists Pollute Less? Evidence from a Restructured Electricity Market", published in the Journal of Industrial Economics in 2007, explores the impact of oligopolies on pollution levels. The paper specifically examines the electricity market in Maryland, where electricity restructuring and new environmental regulations led to a substantial decrease in air pollution in 1999.

Oligopolists can influence output decisions by distorting them to increase prices, which can lead to cross-firm production inefficiencies. In the context of pollution, strategic firms within an oligopoly can reduce their emissions relative to other firms and their historical emissions. Mansur's study found that such firms reduced emissions by approximately 20%.

The observed behaviour of these firms can be compared to estimates of production and emissions in a competitive market. Changing costs explain approximately two-thirds of the pollution reductions, while the remaining third can be attributed to firms exercising market power. This suggests that oligopolists' output decisions can have a significant impact on pollution levels, and that market power can play a role in reducing emissions.

Frequently asked questions