Powering a Green Progress: The Effect of Electricity Deregulation on Environmental Research

This paper analyzes the impact of changing market structure on environmental research expenditure by investor owned utilities in the US electricity sector for the period 1989-1997. The main finding suggests that after controlling for firm characteristics and the “greenness” of the state, deregulation decreases such R&D expenditure, while effective competition increases it. When these opposing trends are factored in, the empirical model estimates that for a one percent increase in overall market competition, environmental research declines by 1.1 percent. It also finds that environmental regulations like the Clean Air Act, can help stem the decline in environmental research even in the face of market restructuring and competition.