Research

Working Papers

"The Impact of the European Carbon Market on Firm Productivity: Evidence from Italian Manufacturing Firms." with Sara Calligaris and Filippo Maria D'Arcangelo.

Abstract. The key policy adopted by the European Union to reduce greenhouse gas emissions is the Emission Trading System: a market for rights to emit. The introduction of this policy has raised concerns about possible detrimental effects on firms' production through an increase in polluting costs, unless firms change inputs or increase their productivity. In this paper, we provide evidence of the causal impact of this European policy on firms total factor productivity. We combine structural estimation of firms' production function and techniques for policy evaluation to estimate the effect of the EU ETS on Italian manufacturing firms. Our results show a positive effect of the policy on productivity with heterogeneous effects across sectors. Results also suggest that firms reacted to the policy not reducing their input or upgrading their capital but adjusting their production process.

"Green Cars Adoption and the Supply of Alternative Fuels"

Abstract. Easy access to stations serving alternative fuels is an obvious concern for customers considering to buy a “green” car. Yet, the supply of fuel is seldom considered analyzing how to promote the adoption of environmentally friendly vehicles. I develop and estimate a joint model of demand for cars and supply of alternative fuels. I use this framework to compare the effectiveness of a subsidy to consumers who buy cars running on alternative fuels to that of a subsidy to gas stations installing alternative fuel pumps. Counterfactual simulations suggest that subsidizing fuel retailers to offer alternative fuels is a more effective policy that indirectly increases low emission car sales.

Publications

"Strategic Entry and Potential Competition: Evidence from Compressed Gas Fuel Retail'' with Andrea Pozzi and Gabriele Rovigatti. International Journal of Industrial Organization, Volume 69, March 2020, Article 102566.

Abstract. We provide novel evidence on the effect of the threat of potential competition on the timing of entry in a new and growing industry. Exploiting a change in regulation in the Italian retail fuel market that generates exogenous variation in the number of potential entrants in the emerging Compressed Natural Gas segment, we show that markets with a higher number of potential entrants witness speedier entry decisions. We document that this result is likely driven by an increase in the incentives to preempt the market due to heightened risk of being anticipated by competitors.

"The European Union Emission Trading System and Technological Change: The case of the Italian pulp and paper industry" with Fulvio Fontini, (2014) Energy Policy, 68, 603-607.

Abstract. We evaluate the contribution of technological change in reducing CO2 emissions in the Italian pulp and paper industry during the first and second phases of application of the European Union Emission Trading System (EU-ETS). We decompose the variation in emission and emission intensity into three different types of effects: a composition effect, a technique effect and a scale effect. The composition effect measures the change in emissions and emissions intensity due to a shift in production towards products that cause less emissions. The technique effect measures the change per each type of product, thereby accounting for technology improvements in the production of each type of good produced. The scale effect singles out the reduction in total emission due to an overall reduction in output. We show that the first phase of the application of EU-ETS has led to a reduction in both emissions and emission intensity due to the composition effect. The technological change has had a limited negative impact on emissions in the first phase, while in the second phase there has been limited technology improvement in the industry. However, the figures of the scale effect show that the larger reduction in emission is due to the overall decrease in output.