Environmental Studies Program
3502 Trousdale Parkway, SOS B15, MC0036
Los Angeles, CA 90089
NBER Working Papers and Publications
|January 2012||Costly Blackouts? Measuring Productivity and Environmental Effects of Electricity Shortages|
with Karen Fisher-Vanden, Erin T. Mansur: w17741
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 fact...