Information Disclosure Policies: Evidence from the Electric Industry Articles uri icon

publication date

  • April 2010

start page

  • 483

end page

  • 498

issue

  • 2

volume

  • 48

International Standard Serial Number (ISSN)

  • 0095-2583

Electronic International Standard Serial Number (EISSN)

  • 1465-7295

abstract

  • While theory suggests that information programs may correct market failures and improve welfare, the empirical impacts of these policies remain undetermined. We show that mandatory disclosure programs in the
    electricity industry achieve stated policy goals. We find that the
    proportion of fossil fuels decreases, and the proportion of clean fuels
    increases in response to disclosure programs. However, the programs may
    produce unintended consequences. For example, programs may make "clean"
    firms cleaner, while leaving "dirty" firms relatively unchanged. If the
    marginal benefits of pollution abatement are larger at dirty firms than
    at clean firms, disclosure programs may induce inefficient abatement
    allocations.