Corbae, Dean2011-06-222017-05-112011-06-222017-05-112011-05http://hdl.handle.net/2152/11895textIn this dissertation, I study the effect of environmental regulation on firm behavior. In the first chapter, I use a dynamic model to quantify the effects on exit, entry, investment and welfare of different allocation schemes of a cap-and-trade program. I focus on allocation rules regarding closing plants and new entrants. I calibrate the model with data from the US power plants and perform two policy experiments: first I quantify the effects of the introduction of a cap-and-trade program; second, I do a counterfactual where I switch the allocation rule and study the effect on the new equilibrium and welfare. In the second chapter of this dissertation, I ask whether multinational firms are harmful for a host country environment. I use plant-level data from Chile and find empirical evidence that multinational are cleaner than domestic plants. Based on the trade literature, I build a model where I add environmental regulation and a technology choice. The model proposes a new explanation of why multinationals firms might be cleaner than their domestic peers. I get policy implications from the model and test them with the data. In the third chapter, I study the relation between free permit allocation in a cap-and-trade program and financial constraints. I use the change in the permit prices and the heterogeneity in permit allocation to identify financial constraints for the investor-owned utilities in the electricity sector.electronicengCopyright is held by the author. Presentation of this material on the Libraries' web site by University Libraries, The University of Texas at Austin was made possible under a limited license grant from the author who has retained all copyrights in the works.Firm dynamicsEnvironmental regulationCap-and-tradePermit allocationElectricity sectorMultinational firmsInternational trade