Essays in Environmental Economics and Industrial Organization

Abstract

This dissertation consists of three essays at the intersection of environmental economics and industrial organization. The common theme is the use of empirical economic analysis to evaluate government policy affecting renewable energy industries. In Chapter 1, I analyze the impacts of consumer subsidies in the global market for solar panels, accounting for short-run and long-run responses by consumers and firms. I quantify these responses by estimating a dynamic structural model of competition among solar panel manufacturers. I focus on one margin of innovation by firms and find that long-run supply responses are economically important, and that subsidies to consumers in one market generate spillovers to other markets through the innovative responses of firms, which are active in multiple markets. In Chapter 2, I study the impacts of trade policy on the market for solar panels. I use the synthetic control method and a structural model of the solar panel market to quantify the impact of duties imposed on solar panels imported into the United States, and to highlight the environmental implications of these trade policies. Finally, in Chapter 3, I exploit a natural experiment to examine the choice between subsidizing investment or output to promote wind electricity production. Using regression discontinuity and matching estimators, I find that output subsidies lead wind farms to produce more electricity than investment subsidies. As a result, output subsidies are likely to be more cost-effective than investment subsidies in this context.