According to the Journal of Political Economy (JPE) official website, Zhang Wendan, a young faculty member at the School of Environmental and Ecological of Renmin University of China, has co-authored a research paper titled "Policy Uncertainty in the Market for Coal Electricity: The Case of Air Toxics Standards," which has been accepted for publication in the top-tier economics journal, Journal of Political Economy. The paper, co-authored with Gautam Gowrisankaran from Columbia University and Ashley Langer from the University of Arizona, is expected to be published in June 2025.

Policy uncertainty affects crucial and irreversible decisions such as technology adoption and exit. The formation and implementation of policies may involve uncertainty. For example, in the United States, policy formation may be influenced by court challenges and changes in executive leadership, leading to policy uncertainty. This uncertainty incurs costs for firms and can affect the achievement of policy goals.

This paper introduces a game-theoretic equilibrium concept called Approximate Belief Oligopoly Equilibrium (ABOE) and identifies the perceived probabilities of future Mercury and Air Toxics Standards (MATS) enforcement. This study estimates the impact of resolving policy uncertainty earlier through counterfactual simulations. The research finds that the perceived enforcement probability of MATS policy enforcement was only 43%. Eliminating uncertainty earlier would increase profits by $1.39 billion but would also raise pollution costs by $0.652 to $1.776 billion. Had exit been unlikely, resolving uncertainty early would have decreased pollution.

This study expands on research related to measuring economic and policy uncertainty by proposing a method to estimate firms’ perceptions of policy uncertainty. It simulates how resolving policy uncertainty earlier would affect the economy and environment. Furthermore, this research develops a dynamic oligopoly model of the electricity industry that incorporates policy uncertainty and an equilibrium concept ABOE.

The Journal of Political Economy is one of the oldest and most prestigious international academic journals in economics. Founded in 1892 and published by the University of Chicago Press, it is considered one of the "top five" economics journals.