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Browsing Documentos de Investigación by Author "Dardati, Evangelina"

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    Financial Constraints and Investments: a Quasi-Experiment in the Electricity Sector
    (Universidad Alberto Hurtado. Facultad de Economía y Negocios, 2013) Dardati, Evangelina; Riutrot, Julio
    We study the impact of financial constraints on the investment behavior of electricity generating utilities. The pollution permit allocation rule of the US SO2 regulation introduced variation in internally available funds, in an industry where firms are otherwise very similar. We use this exogenous variation to identify the relationship between cash flow and investment. Consistent with a financial constraints explanation, this relationship is on average positive but decreases with firm size.
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    Pollution Permit System and Firm Dynamics: Does the Allocation Scheme Matter?
    (Universidad Alberto Hurtado. Facultad de Economía y Negocios, 2013) Dardati, Evangelina
    Most cap-and-trade systems allocate permits for free. However, they differ dependent on whether closing plants and new entrants get free permits. I use a dynamic model with heterogeneous firms and equilibrium conditions in the output and emission market to quantify the effect on exit/entry, investment and welfare of different allocation rules. I calibrate the model with data from the power plants participating in the US SO2 program and quantify the effects of two allocation schemes: The US SO2 case, in which closing plants keep their permits and new entrants do not get any of them; The EU-ETS case, in which plants lose permits upon exit and new entrants get allowances. If the US switched to the EU-ETS allocation scheme, the price of output would be 1.5% lower, the price of permits 7.6% higher, and there would be a distribution of dirtier and less productive plants. Consumers are better off if the US switched to the EU-ETS system (lower price), while producers are better off with the US SO2 system (higher profits).