Mandatory Information Disclosure Policy: Evidence from the electric utility industry

M. Delmas, J. Shimshack, M. Montes

A “third wave” of environmental policy has recently emerged that emphasizes information provision as an integral part of the risk mitigation strategy. While theory suggests that information programs may correct market failures and improve welfare, the empirical effectiveness of these programs remains largely undetermined. We show that mandatory information disclosure programs in the electricity industry achieve stated policy goals. We find that the average proportion of fossil fuels decreases and the average proportion of clean fuels increases in response to disclosure programs. However, the programs also produce unintended consequences. Customer composition and pre-existing fuel mix significantly affect program response, suggesting that effective information disclosure policies may not be efficient.

Working Paper | 2010

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