Opening the Brown Box: Production Responses to Environmental Regulation
Regulated firms outsource power and shift product mix, reducing product variety.
Rebecca De Simone, S. Lakshmi Naaraayanan, Kunal Sachdeva
Working paper, 2026
Firms reduce pollution through strategic production choices: sourcing electricity externally and shifting toward higher-margin products. However, aggregate effects include reduced product variety and decreased business formation.
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@techreport{desimone2026brown,
title={Opening the Brown Box: Production Responses to Environmental Regulation},
author={De Simone, Rebecca and Naaraayanan, S. Lakshmi and Sachdeva, Kunal},
year={2026},
type={SSRN Working Paper},
institution={Social Science Research Network},
number={4707581},
doi={10.2139/ssrn.4707581}
}