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The EU ETS and Firm Profits: An Ex-post Analysis for Swedish Energy Firms

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  • Yu, Haisan

    (Department of Economics)

Abstract

In January, 2005, the EU launched the first international emissions trading system (EU ETS), aimed at reducing carbon emissions in a cost-effective way by means of a market-based instrument. In this paper, we use the treatment/control, before/after design of the natural experiment approach to investigate the treatment effect of the EU ETS on the profitability of a sample of Swedish energy firms in 2005 and 2006. We also investigate whether under-cap and over-cap firms respond differently to the EU ETS. The estimation results in general suggest no significant impact in 2005 and a negative significant impact in 2006. The sub-sample analysis suggests that profitability of under-cap and over-cap firms were affected differently by the EU ETS in 2005, but not in 2006.

Suggested Citation

  • Yu, Haisan, 2010. "The EU ETS and Firm Profits: An Ex-post Analysis for Swedish Energy Firms," Working Paper Series 2011:2, Uppsala University, Department of Economics.
    • Handle: RePEc:hhs:uunewp:2011_002
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    EU ETS; difference-in-differences; fixed effect;
    All these keywords.

    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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