Kenan-Flagler Business School, University of North Carolina – Chapel Hill, USA

Do Firms Reduce Emissions Efficiently?

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Abstract

Carbon pricing relies on the micro-level behavioral assumption that economic actors will respond to price signals by reducing their emissions efficiently, prioritizing abatement activities with the lowest marginal cost before moving on to higher cost alternatives. Under what conditions do firms exhibit increasing marginal abatement costs consistent with the efficiency assumption? Using data covering the emissions reductions initiatives among a global sample of 2013 firms between 2013 and 2019, I find that very few firms pursue abatement initiatives that demonstrate increasing marginal costs over time. Exposure to regulatory carbon pricing is not associated with more cost-efficient emission reduction pathways. This finding is part of a larger study characterizing decarbonization strategies. Firms can use this framework to evaluate their own decarbonization plans and chart a course that matches their goals and priorities. 

Biography

Angelyn Otteson Fairchild is a Ph.D. candidate in Strategy & Entrepreneurship at the Kenan-Flagler Business School, University of North Carolina – Chapel Hill. She is the inaugural Sustainability Scholar at the Ackerman Center for Sustainable Enterprise. Her research interests include corporate decarbonization, corporate and stakeholder responses to social movements, and collaboration in nascent climate-tech industries. Prior to starting her Ph.D., Angelyn was a health economics consultant, conducting discrete choice experiment research in collaboration with pharmaceutical companies to evaluate patients’ perceptions of benefit-risk tradeoffs in healthcare settings. She holds a Bachelor’s degree in Economics and International Development from Brigham Young University (2010).