Working Papers
Competitive Externalities of U.S. Government Economic Development Subsidies, with Allison Koester and Elisa Casi-Eberhard, Revise & Resubmit at Journal of Accounting Research
We investigate the competitive consequences of government financial assistance by examining non-assisted firms operating in the same product market as assisted firms. Using a novel dataset of U.S. federal, state, and local government assistance to U.S. public firms, we find that increases in government assistance to competitors are associated with a 12.2% decrease in non-assisted firms' financial performance. The decline in financial performance is driven by decreasing revenues and increasing research and development expenses. Results are more pronounced for financially constrained firms, and concentrated in permanent government assistance in the form of cash grants, cost reimbursements, and tax abatements/credits (rather than temporary assistance in the form of loans). We further show that greater competitor assistance is associated with a 5.1% decline in market share, particularly in less competitive markets. Overall, the evidence indicates that government assistance generates negative competitive externalities for non-assisted firms - a potentially unintended and previously unexplored consequence of government intervention that benefits some firms at the competitive expense of others.
Do US Government Environmental Subsidies Improve Corporate Environmental Performance? with Allison Koester
We analyze the relation between US government environmental subsidies — an important component of environmental tax and fiscal policy—on corporate environmental performance. Our sample includes over $48 billion in environmental subsidies awarded by US federal, state, and local governments from 2000 through 2021 to US publicly traded firms. Using facility-chemical-year data, we find that environmental subsidy amounts are unrelated to future waste intensity and negatively related to future pollution intensity for non-toxic chemicals, consistent with operational improvements for less severe chemicals. We also find that environmental subsidy amounts are associated with a decrease in future environmental regulatory violations and the occurrence, severity, and reach of publicly scrutinized environmental risk incidents, as well as an increase in future green (and non-green) innovation. These benefits are driven by subsidies in the form of loans, rather than in the form of cash grants and tax abatements/credits. Our collective findings suggest that while environmental subsidies are ineffective in curbing the most harmful types of pollution, they are associated with improvements in corporate environmental regulatory compliance and innovation.
The Impact of Government Subsidies on Firms’ Innovation Strategies, with Regi Kusumaatmadja (Draft available upon request)
Governments spend hundreds of billions of dollars each year to support private-sector innovation, but it is unclear whether this money expands existing research, redirects it toward new technologies, or reallocates innovation away from other firms. We study this question using a panel of U.S. public firms from 2000 to 2021, comparing recipients of government financial assistance to similar non-recipients. We separate two dimensions of a firm's innovation. "Scope" is how much a firm patents and how many technology areas it covers. "Direction" is what those patents are about: specifically, whether they align with an industry's most-cited, frontier technologies. Financial assistance expands scope sharply. Recipients patent more and enter more technology classes within a few years, and the effect keeps growing for up to two decades. Direction shifts too, but more slowly, moving recipients' patents toward their industry's frontier technologies over a decade or more. This shift is driven mainly by cash grants tied to R&D, is weaker for tax credits, and is absent for loans. Part of the scope expansion comes at competitors' expense. When we identify rivals by actual product-market overlap rather than broad industry codes, a recipient's closest rivals lose patenting share over the following decade, while their own research direction is unaffected.
Migration of Experts in Times of High Demand: Evidence from the Market of Tax Professionals, with Elisa Casi-Eberhard and Kim Alina Schulz (Draft and abstract available soon)
The Spatial Effects of Environmental Incentives: Evidence and Optimal Fiscal Policy Design, with Paula Navarro Sarmiento
Policy Incentives, Market Entry, and the Spatial Supply of EV Charging Infrastructure, with Paula Navarro Sarmiento and Øyvind Thomassen
Local charger availability and Electric Vehicle adoption: Evidence from Norway, with Øyvind Thomassen, Journal of Environmental Economics and Management, Forthcoming
This paper examines the effect of local public charging infrastructure on electric vehicle (EV) adoption using microdata from Norway between 2010 and 2023. We use 1.59 million new car registrations, geocoded to buyers' residences and matched to nearby charging stations, along with neighbourhood controls and fixed effects, to estimate the causal impact of local charger availability. Our preferred estimates show that adding 100 normal chargers within 5 km of a new car buyer’s residence increases the probability of EV adoption by 0.6 percentage points, while 100 fast chargers raise it by 3 percentage points.
Evaluating Norway’s Electric Vehicle Incentives, with Øyvind Thomassen, Energy Economics, 2025
We use car registration data from 2000 to 2021, as well as price lists and tax rules, to evaluate Norway’s incentives for consumers to choose electric vehicles. These include taxes on fossil fuels, EV exemption from car purchase taxes, and other incentives, like discounts on road tolls. We find that undoing the incentive with the largest effect, the EV exemption from purchase taxes, would reduce the EV market share to 25 percent from the 66 percent observed in 2021, increase CO2 emissions of new cars sold by 167 percent, reduce their total weight by 22 percent, and reduce the number of new cars sold by 10 percent. Lost tax revenues imply a carbon price of 1700 USD per metric tonne. But taking into account consumer and producer surplus, the tax exemption is welfare enhancing even before putting a value on emissions reductions.
Electric Vehicle Ownership and Political Preferences in Norway, with Øyvind Thomassen, Transportation Research Part D, 2025
Using a representative survey of about 23,000 Norwegian households in the years 2020 to 2022, we find that electric vehicle (EV) ownership is strongly related to political preferences on the cosmopolitan/liberal vs. nationalist/traditional axis. Regression results, using car owners only, show that when we control for income, education, and other demographic variables, as well as year and municipality fixed effects, a one standard deviation shift in the nationalist/traditional direction reduces EV ownership by 5.4 percentage points relative to the sample mean among car owners (18.8 percent EV ownership). We also find a relationship between EV ownership and political preferences on the left vs. right axis, where right means favouring less state involvement in the economy. Here a one standard deviation shift towards the right results in a 2.9 percentage point increase in EV ownership ceteris paribus.