  Does a more transparent climate disclosure policy induce lower emissions?
This paper analyzes the welfare consequences of transparency in corporate
disclosure regulation in an environment in which regulatory disclosure
constitutes the sole avenue for the verification of a firm's emissions. On the
one hand, a potential trade-off between disclosure transparency and externality
suggests a non-monotonic relationship between them. On the other hand,
increased transparency never makes the firm worse off. Consequently, mandating
full disclosure is no different from maximizing the firm's private benefit
while disregarding the ensuing externality. When the regulator is symmetrically
informed about the firm's energy efficiency level, transparency beyond binary
disclosure does not lead to welfare improvements. In the presence of
information asymmetry, the welfare-maximizing disclosure takes a threshold
form: all emissions above the threshold are pooled together, whereas all
emissions below are fully disclosed.
