TY  - JOUR
AU  - Fisher-Vanden,Karen
AU  - Mansur,Erin T.
AU  - Wang,Qiong (Juliana)
TI  - Costly Blackouts? Measuring Productivity and Environmental Effects of Electricity Shortages
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17741
PY  - 2012
Y2  - January 2012
UR  - http://www.nber.org/papers/w17741
L1  - http://www.nber.org/papers/w17741.pdf
N1  - Author contact info:
Karen Fisher-Vanden
Department of Agric. Economics and Rural Soc.
112-E Armsby Building
Pennsylvania State University
University Park, PA 16802
E-Mail: fishervanden@psu.edu

Erin T. Mansur
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: (603) 646-2531
Fax: (603) 646-2122
E-Mail: erin.mansur@dartmouth.edu

Qiong Wang
Environmental Studies Program
3502 Trousdale Parkway, SOS B15, MC0036
Los Angeles, CA 90089
E-Mail: juliana.wang@usc.edu
AB  - In many countries, unreliable inputs, particularly those lacking storage, can significantly limit a firm's productivity. In the case of an increasing frequency of blackouts, a firm may change factor shares in a number of ways. It may decide to self generate electricity, to purchase intermediate goods that it used to produce directly, or to improve its technical efficiency. We examine how industrial firms responded to China's severe power shortages in the early 2000s. Fast-growing demand coupled with regulated electricity prices led to blackouts that varied in degree over location and time. Our data consist of annual observations from 1999 to 2004 for approximately 32,000 energy-intensive, enterprises from all industries. We estimate the losses in productivity due to factor-neutral and factor-biased effects of electricity scarcity. Our results suggest that enterprises re-optimize among factors in response to electricity scarcity by shifting from energy (both electric and non-electric sources) into materials---a shift from "make" to "buy." These effects are strongest for firms in textiles, timber, chemicals, and metals. Contrary to the literature, we do not find evidence of an increase in self generation. Finally, we find that these productivity changes, while costly to firms, led to small reductions in carbon emissions.
ER  -