Improving Predictability of Wind Power Generation Using Empirical Data

Wind energy plays an important role in decarbonizing the economy and increasingly accounts for a growing share of electricity supply […]

Sustainability Analytics: Meeting Carbon Commitments Most Efficiently

What makes a sustainable company a sustainable company? More and more companies are setting seemingly ambitious net-zero targets for their […]

Economic Implications of the Climate Provisions of the Inflation Reduction Act

The Inflation Reduction Act (IRA) represents the largest federal response to climate change to date. We highlight the key climate […]

Another Source of Inequity? How Grid Reinforcement Costs Differ by the Income of EV User Groups

The power demand for electric vehicles in future mobility scenarios may lead to peaks and overloads threatening grid stability. The […]

Research Commentary: Comments on Draft Revisions to OMB Circulars A-4 and A-94

The Office of Information and Regulatory Affairs (OIRA) issued draft Circulars A-4 and A-94 for public comment earlier this year.  […]

Cost-Efficient Pathways to Decarbonizing Portland Cement Production

Accounting for nearly 8% of global annual carbon dioxide (CO2) emissions, the cement industry is considered difficult to decarbonize. While […]

Climate Impacts of Bitcoin Mining in the U.S.

Opinions regarding the climate impacts of Bitcoin mining deviate fundamentally between scholars and Bitcoin proponents. We validate arguments from both […]

Research Commentary: The EU Commission’s Proposal for Improving the Electricity Market Design: Treading Water, But Not Drowning

On March 14, 2023, the European Commission (EC) published the much awaited “Proposal for a regulation (…) to improve the […]

Redistribution Through Technology: Equilibrium Impacts of Mandated Efficiency in Three Electricity Markets

We consolidate, generalize, and expand on a set of price-theory results to measure consumer benefits from technologies that improve the […]

Advances in Power-to-Gas Technologies: Cost and Conversion Efficiency

Widespread adoption of hydrogen as an energy carrier is widely believed to require continued advances in Power-to-Gas (PtG) technologies. Here […]

Impacts of Rainfall Shocks on Out-migration in Türkiye are Mediated More by Per Capita Income than by Agricultural Output

Rural populations are particularly exposed to increasing weather variability, notably because of agriculture. In this paper, we exploit longitudinal data […]

The Role of State Investment Banks for Renewable Energy Technologies in OECD Countries

To mitigate climate change, governments use various policy instruments to support low-carbon technologies. In many cases, state investment banks (SIBs) […]

Exploring a Suitable Business Model for Nuclear Batteries

The ‘nuclear battery’ is a new concept for delivering nuclear powered heat and electricity. Their small scale and portability enable […]

Money (Not) to Burn: Payments for Ecosystem Services to Reduce Crop Residue Burning

Particulate matter significantly reduces life expectancy in India. We use a randomized controlled trial in the Indian state of Punjab […]

Power Price Crisis in the EU 3.0: Proposals to Complete Long-Term Markets

On the 23rd of January 2023, the European Commission launched a public consultation on the reform of the EU’s electricity […]

Research Commentary: Calls for an Electricity Market Reform in the EU: Don’t Shoot the Messenger

The ongoing energy crisis has severely hit energy consumers in Europe. Although it is a gas crisis, the existing electricity […]

Accelerating Electric Vehicle Charging Investments: A Real Options Approach to Policy Design

Replacing conventional cars and trucks with battery electric vehicles requires a rapid expansion of fast-charging infrastructure. However, private sector charging […]

Research Commentary: Economy-Wide Decarbonization Requires Fixing Retail Electricity Rates

Absent fundamental reform of retail electricity rates, economy-wide electrification will be substantially more difficult than necessary. In this Research Commentary, […]

The Macroeconomic Impact of Europe’s Carbon Taxes

We estimate the macroeconomic impacts of carbon taxes on GDP and employment growth rates using 30 years of data on […]

How Much Are Electric Vehicles Driven? Depends on the EV

We use the 2017 National Household Travel Survey to investigate whether all-electric vehicles (EVs) are driven less than their counterfactual […]

Temperature and Cognitive Performance

I estimate the effect of temperature on cognitive performance in online brain training games. As this setting represents everyday cognitive […]

Natural Gas in the U.S. Southeast Power Sector under Deep Decarbonization: Modeling Technology and Policy Sensitivities

Concerns over climate change, along with falling costs of renewable energy technologies, have led to increased scrutiny over the role […]

Carbon Abatement Costs for Hydrogen Fuels in Hard-to-Abate Transport Sectors and Potential Climate Policy Mixes

Deep decarbonization targets require emission reductions in “hard-to-abate” sectors that have until recently received little attention, including freight trucking, shipping, […]

Five Myths About Carbon Pricing

While carbon pricing, in general, and carbon taxes, in particular, are popular with economists, they are subject to considerable misunderstanding […]

Electricity Retail Rate Design in a Decarbonizing Economy: An Analysis of Time-of-Use and Critical Peak Pricing

Currently, U.S. residential and small commercial electricity consumers typically pay a constant price per kWh consumed that accounts for most […]

Rational Rationing: A Price-Control Mechanism for a Persistent Supply Shock

We propose a simple price-control mechanism correcting for a missing short-run response of demand to prices. It effectively implements an […]

The Macroeconomic Effects of a Carbon Tax to Meet the U.S. Paris Agreement Target: The Role of Firm Creation and Technology Adoption

We analyze the labor market and aggregate effects of a carbon tax in a framework with pollution externalities and equilibrium […]

Long-term Equilibrium in Electricity Markets with Renewables and Energy Storage Only

In this paper, we study the optimal generation mix in power systems where only two technologies are available: variable renewable […]

Population, Productivity, and Sustainable Consumption

How does the sustainable level of consumption depend on productivity growth and the size and growth rate of the population? […]

Sustainable Hydrogen Fuels versus Fossil Fuels for Trucking, Shipping and Aviation: A Dynamic Cost Model

Potential decarbonization of the global trucking, shipping and aviation sectors by 2050 could be achieved by replacing fossil fuels with […]

When “Low-Hanging Fruit” Are Beyond Reach: Management Practices and Firm Energy Efficiency

We study whether structured management practices affect the uptake and impact of industrial energy efficiency measures, which are widely considered […]

Deregulation, Market Power, and Prices: Evidence from the Electricity Sector

When deciding whether to introduce market competition in a regulated industry, a regulator faces an important tradeoff. Market-based prices can […]

Electricity Sector Policy Reforms to Support Efficient Decarbonization

The final version of this paper will appear as Chapter 8 in the forthcoming MIT Energy Initiative study, The Future […]

Coping with National Fuel Subsidies in Regional Power Markets: Application to the Gulf Cooperation Council Interconnector

Transnational power market design and development are impacted by economic, social and political factors that must inevitably be addressed. One […]

Technology Neutral vs. Technology Specific Procurement

An imperfectly-informed regulator needs to procure multiple units of some good (e.g., green energy, market liquidity, pollution reduction, land conservation) […]

Power Price Crisis in the EU: Unveiling Current Policy Responses and Proposing a Balanced Regulatory Remedy

For several months, electricity prices in the European Union (EU) have been at sustained and unprecedentedly high levels. This situation […]

Properties of Deeply Decarbonized Electric Power Systems with Storage

The final version of this paper will appear as Chapter 6 in the forthcoming MIT Energy Initiative study, The Future […]

Electricity Pricing Problems in Future Renewables-Dominant Power Systems

Constraints on electric power system carbon emissions will make optimal increased reliance on variable renewable energy (VRE, mainly wind and […]

Colluding Against Environmental Regulation

We study collusion among firms under imperfectly monitored environmental regulation. We develop a model in which firms increase variable profits […]

Why Do Firms Issue Green Bonds?

Green bonds allow firms to commit to climate-friendly projects. Equity investors react positively to their announcement. Based on prior empirical […]

The Weak Tie Between Natural Gas and Oil Prices

Several recent studies establish that crude oil and natural gas prices are cointegrated. Yet at times in the past, and […]

Capacity Factor Risk At Nuclear Power Plants

We develop a model of the dynamic structure of capacity factor risk. It incorporates the risk that the capacity factor […]

Financing a National Transmission Grid: What Are the Issues?

The United States requires a substantial investment in transmission capacity over the next several decades. This investment is needed to […]

Gas Balancing Rules Must Take into account the Trade-off between Offering Pipeline Transport and Pipeline Flexibility in Liberalized Gas Markets

This paper analyses the value and cost of line-pack flexibility in liberalized gas markets through the examination of the techno-economic […]

Comparing the Costs of Intermittent and Dispatchable Electricity Generating Technologies

Economic evaluations of alternative electric generating technologies typically rely on comparisons between their expected life-cycle production costs per unit of […]

Fat Tails, Thin Tails, and Climate Change Policy

Climate policy is complicated by the considerable compounded uncertainties over the costs and benefits of abatement. We don’t even know […]

Towards an Emissions Trading Scheme for Air Pollutants in India

Emissions trading schemes have great potential to lower pollution while minimizing compliance costs for firms in many areas now subject […]

On The Portents of Peak Oil (And Other Indicators of Resource Scarcity)

Although economists have studied various indicators of resource scarcity (e.g., unit cost, resource rent, and market price), the phenomenon of […]

Modelling the Effects of Nuclear Fuel Reservoir Operation in a Competitive Electricity Market

In many countries, the electricity systems are quitting the vertically integrated monopoly organization for an operation framed by competitive markets. […]

Electricity Network Tariff Architectures: A Comparison of Four OECD Countries

The study is motivated by the question “what is the optimal tariff design?” While we do not offer an answer […]

Risk and Responsibility Sharing in Nuclear Spent Fuel Management

With the Nuclear Waste Policy Act of 1982, the responsibility of American utilities in the long-term management of spent nuclear […]

Taxation and the Extraction of Exhaustible Resources: Evidence From California Oil Production

Rapid increases in oil prices in 2008 led some to call for special taxes on the oil industry. Because oil […]

Uncertainty and Energy Saving Investments

Energy costs are notoriously uncertain but what is the effect of this on energy saving investments? We find that real-option […]

Speculation without Oil Stockpiling as a Signature: A Dynamic Perspective

According to the standard analysis of commodity prices, stockpiling is a necessary signature of speculation. This paper develops an approach […]

Why and How the European Union Can Get a (Near To) Carbon-Free Energy System in 2050?

Reducing the European Union GHG emissions by at least 80% by 2050 will require a near zero carbon electricity, road […]

Modeling the Impact of Warming in Climate Change Economics

Any economic analysis of climate change policy requires some model that describes the impact of warming on future GDP and […]

Investment in Energy Infrastructure and the Tax Code

Federal tax policy provides a broad array of incentives for energy investment. I review those policies and construct estimates of […]

Cap-and-Trade Properties under Different Scheme Designs

This paper examines the key design mechanisms of existing and proposed cap-and-trade markets. First, it is shown that the hybrid […]

A Comparison of Reduced-Form Permit Price Models and their Empirical Performances

Equilibrium models have been proposed in literature with the aim of describing the evolution of the price of emission permits. […]

Renewable Electricity Generation in the United States

This paper provides an overview of the use of renewable energy sources to generate electricity in the United States and […]

Allocation in Air Emissions Markets

The past two decades have witnessed the increasing use of a new form of environmental regulation, cap-and-trade, that consists of […]

Rethinking Real Time Electricity Pricing

Most US consumers are charged a near-constant retail price for electricity, despite substantial hourly variation in the wholesale market price. […]

Social Norms and Energy Conservation

This paper evaluates a pilot program run by a company called OPOWER, previously known as Positive Energy, to mail home […]

Black Gold & Fool’s Gold: Speculation in the Oil Futures Market

This paper addresses the question of whether the oil price spike of 2003-2008 was a bubble. We document and discuss […]

The Economic and Policy Consequences of Catastrophes

What is the likelihood that the U.S. will experience a devastating catastrophic event over the next few decades – something […]

Comparison of the Evolution of Energy Intensity in Spain and in the EU15. Why is Spain Different?

Energy intensity in Spain has increased since 1990, while the opposite has happened in the EU15. Decomposition analysis of primary […]

A Comprehensive Approach for Computation and Implementation of Efficient Electricity Transmission Network Charges

This paper presents a comprehensive design of electricity transmission charges that are meant to recover regulated network costs. In addition, […]

Regulatory Instruments for Deployment of Clean Energy Technologies

Answering to the formidable challenge of climate change calls for a quick transition to a future economy with a drastic […]

Nuclear Fuel Recycling – the Value of the Separated Transuranics and the Levelized Cost of Electricity

We analyze the levelized cost of electricity (LCOE) for three different fuel cycles: a Once-Through Cycle, in which the spent […]

Uncertain Outcomes and Climate Change Policy

Focusing on tail effects, I incorporate distributions for temperature change and its economic impact in an analysis of climate change […]

Market Power in Pollution Permit Markets

As with other commodity markets, markets for trading pollution permits have not been immune to market power concerns. In this […]

The Cost of Climate Policy in the United States

We consider the cost of meeting emissions reduction targets consistent with a G8 proposal of a 50 percent global reduction […]

Multi-Factor Model of Correlated Commodity – Forward Curves for Crude Oil and Shipping Markets

An arbitrage free multi-factor model is developed of the correlated forward curves of the crude oil, gasoline, heating oil and […]

Designing a US Market for CO2

In this paper we focus on one component of the cap-and-trade system: the markets that arise for trading allowances after […]

Update on the Cost of Nuclear Power

We update the cost of nuclear power as calculated in the MIT (2003) Future of Nuclear Power study. Our main […]

On Coase and Hotelling

It has been long recognized that an exhaustible-resource monopsonist faces a commitment problem similar to that of a durable-good monopolist. […]

Challenges for Creating a Comprehensive National Electricity Policy

This is a speech given to the National Press Club, September 26, 2008 outlining the need for comprehensive reform of […]

Grandfathering and the Endowment Effect An Assessment in the context of the Spanish National Allocation Plan

In this paper, we test the Coase theorem in the context of carbon emissions trading. We investigate whether generating firms […]

A Top-down and Bottom-up look at Emissions Abatement in Germany in response to the EU ETS

This paper uses top-down trend analysis and a bottom-up power sector model to define upper and lower boundaries on abatement […]

Long-term Energy Supply Contracts in European Competition Policy: Fuzzy not Crazy

Long-term supply contracts often have ambiguous effects on the competitive structure, investment and consumer welfare in the long term. In […]

World Oil: Market or Mayhem?

The world oil market is regarded by many as a puzzle. Why are oil prices so volatile? What is OPEC […]

Do Trading and Power Operations Mix? The Case of Constellation Energy Group 2008

Constellation Energy has been a leading performer in the merchant power business since 2001. In addition to its legacy utility, […]

The EU’s Emissions Trading Scheme: A Proto-Type Global System?

The European Union’s Emission Trading Scheme (EU ETS) is the world’s first multinational cap-and-trade system for greenhouse gases. As an […]

An Empirical Model of Imperfect Dynamic Competition and Application to Hydroelectricity Storage

The Nordic power market presents a unique opportunity for testing the nature and degree of market power in storage behavior […]

CO2 Abatement in the UK Power Sector: Evidence from the EU ETS Trial Period

This paper provides an empirical assessment of CO2 emissions abatement in the UK power sector during the trial period of the […]

The Effect of Power Plants on Local Housing Values and Rents: Evidence from Restricted Census Microdata

Current trends in electricity consumption imply that hundreds of new fossil-fuel power plants will be built in the United States […]

Short-Term CO2 Abatement in the European Power Sector

This paper focuses on the possibilities for short term abatement in response to a CO2 price through fuel switching in […]

Forward Trading in Exhaustible-Resource Oligopoly

We analyze oligopolistic exhaustible-resource depletion when firms can trade forward contracts on deliveries, a market structure prevalent in many resource […]

The Diversity of Design of TSOs

It is puzzling today to explain diversity and imperfection of actual transmission monopoly designs in competitive electricity markets. We argue […]

The Effects of Interactions between Federal and State Climate Policies

In the absence of a federal policy to cap carbon emissions many states are moving forward with their own initiatives, […]

Market Power and Electricity Market Reform in Northeast China

The Northeast region of China has been used as a testing ground for creation of a functioning wholesale electric power […]

Quasi-Experimental and Experimental Approaches to Environmental Economics

This paper argues that an increased application of quasi-experimental and experimental techniques will improve understanding about core environmental economics questions. […]

Technical Memorandum on Analysis of the EU ETS Using the Community Independent Transaction Log

This memorandum provides an overview of three deficiencies within the current presentation of the Community Independent Transaction Log (CITL) data […]

The Macroeconomic Effects of Oil Price Shocks: Why are the 2000s so different from the 1970s?

We characterize the macroeconomic performance of a set of industrialized economies in the aftermath of the oil price shocks of […]

First Evidence of Asymmetric Cost Pass-Through of EU Emissions Allowances: Examining Wholesale Electricity Prices in Germany

This paper applies the literature on asymmetric price transmission to the emerging commodity market for EU emissions allowances (EUA). We […]

Reductions in Ozone Concentrations Due to Controls on Variability in Industrial Flare Emissions in Houston, Texas

High concentrations of ozone in the Houston/Galveston area are associated with industrial plumes of highly reactive hydrocarbons, mixed with NOx. […]

The Effect of Variability in Industrial Emissions on Ozone Formation in Houston, Texas

Ambient observations have indicated that high concentrations of ozone observed in the Houston/Galveston area are associated with plumes of highly […]

Technologies, Markets and Challenges for Development of the Canadian Oil Sands Industry

This paper provides an overview of the current status of development of the Canadian oil sands industry, and considers possible […]

Time and Location Differentiated NOX Control in Competitive Electricity Markets Using Cap-and-Trade Mechanisms

Due to variations in weather and atmospheric chemistry, the timing and location of nitrogen oxide (NOX) reductions determine their effectiveness […]

Regulating Carbon Dioxide Capture and Storage

This essay examines several legal, regulatory and organizational issues that need to be addressed to create an effective regulatory regime […]

Public Attitudes Toward America’s Energy Options – Report of the 2007 MIT Energy Survey

The prospects of global warming and potential shortages of oil have brought energy back to the forefront of the list […]

An Institutional Frame to Compare Alternative Market Designs in EU Electricity Balancing

The so-called “electricity wholesale market” is, in fact, a sequence of several markets. The chain is closed with a provision […]

Does Hazardous Waste Matter? Evidence from the Housing Market and the Superfund Program

This paper uses the housing market to develop estimates of the local welfare impacts of Superfund sponsored clean-ups of hazardous […]

The Future of Nuclear Power in the United States: Economic and Regulatory Challenges

This paper examines the economic and regulatory challenges that must be faced by potential investors in new nuclear power plants […]

Infrastructure Investments and Resource Adequacy in the Restructured US Natural Gas Market – Is Supply Security at Risk?

The objective of this paper is to analyze the development of US natural gas infrastructure over the last two decades […]

Uncertainty in Environmental Economics

In a world of certainty, the design of environmental policy is relatively straightforward, and boils down to maximizing the present […]

Over-Allocation or Abatement? A Preliminary Analysis of the EU ETS Based on the 2005 Emissions Data

This paper provides an initial analysis of the EU ETS based on the installation-level data for verified emissions and allowance […]

The Allocation of European Union Allowances: Lessons, Unifying Themes and General Principles

On January 1st, 2005, the EU Emissions Trading Scheme (EU ETS) scheme was officially launched, only two years after the […]

A New Era for Oil Prices

Since 2003 the international oil market has been moving away from the previous 20-year equilibrium in which prices fluctuated around […]

New Entrant and Closure Provisions: How do they distort?

As a person whose life began in England and ended in North America and who maintained academic affiliations in the […]

Energy Prices and the Adoption of Energy-Saving Technology

This paper investigates the link between factor prices, technology and factor demands. I estimate the effect of price-induced technology adoption […]

Long-Term contracts and Asset Specificity Revisited – An Empirical Analysis of Producer-Importer Relations in the Natural Gas Industry

In this paper, we analyze structural changes in long-term contracts in the international trade of natural gas. Using a unique […]

Competitive Electricity Markets and Investment in New Generating Capacity

Evidence from the U.S. and some other countries indicates that organized wholesale markets for electrical energy and operating reserves do […]

The Convergence of Market Designs for Adequate Generating Capacity with Special Attention to the CAISO’s Resource Adequacy Problem

This paper compares market designs intended to solve the resource adequacy (RA) problem, and finds that, in spite of rivalrous […]

Energy Prices and Energy Intensity in China: A Structural Decomposition Analysis and Econometrics Study

Since the start of its economic reforms in 1978, China’s energy prices relative to other prices have increased. At the […]

Using Futures Prices to Filter Short-term Volatility and Recover a Latent, Long-term Price Series for Oil

Oil prices are very volatile. But much of this volatility seems to reflect short-term, transitory factors that may have little […]

Short & Long Run Transmission Incentives for Generation Location

This paper is about one aspect of Britain’s electricity trading system, its advantages and its weaknesses concerning the incentives it […]

Efficient Bidding for Hydro Power Plants in Markets for Energy and Ancillary Services

In order to preserve stability of electricity supply generators must provide ancillary services in addition to energy production. Hydroelectric resources […]

Rational Plunging and the Option Value of Sequential Investment: The Case of Petroleum Exploration

Any investor in assets that can be exploited sequentially faces a tradeoff between diversification and concentration. Loading a portfolio with […]

The Economic Impacts of Climate Change: Evidence from Agricultural Profits and Random Fluctuations in Weather

This paper measures the economic impact of climate change on US agricultural land by estimating the effect of the presumably […]

$2.00 Gas! Studying the Effects of Gas Tax Moratorium

Despite the considerable attention paid to the theory of tax incidence, there are surprisingly few estimates of the pass-through rate […]

Market Power in a Storable-good Market: Theory and Applications to Carbon and Sulfur Trading

We consider a market for storable pollution permits in which a large agent and a fringe of small agents gradually […]

Electricity Internal Market in the European Union: What to do next?

The European Union’s “internal energy market” remains a work in progress. It is even possible its construction were to stall. […]

Incentive Regulation in Theory and Practice: Electricity Distribution and Transmission Networks

Modern theoretical principles to govern the design of incentive regulation mechanisms are reviewed and discussed. General issues associated with applying […]

Oil and Natural Gas Reserve Prices: Addendum to CEEPR WP 03-016: Including Results for 2003 and Revisions to 2001

Introduction. A working paper entitled “Oil and Natural Gas Reserve Prices 1982-2002: Implications for Depletion and Investment Cost” was published […]

Markets for Power in the United States: An Interim Assessment

The transition to competitive wholesale and retail markets for electricity in the U.S. has been a difficult and contentious process. […]

Welfare-enhancing Collusion in the Presence of a Competitive Fringe

Following the structure of many commodity markets, we consider a reduced number of large firms and a competitive fringe of […]

What Should the Government Do to Encourage Technical Change in the Energy Sector?

Government support of innovation – both technology creation and technology demonstration – is desirable to encourage private investors to adopt […]

Regulation of Natural Monopolies

This chapter provides a comprehensive overview of the theoretical and empirical literature on the regulation of natural monopolies. It covers […]

Diversification and the Value of Exploration Portfolios

Conventional wisdom holds that dependence among geological prospects increases exploration risk. However, dependence also creates the option to truncate exploration […]

Forward Trading and Collusion in Oligopoly

We consider an infinitely-repeated oligopoly in which at each period firms not only serve the spot market by either competing […]

The Efficiency and Robustness of Allowance Banking in the U.S. Acid Rain Program

This paper provides an empirical evaluation of the efficiency of allowance banking (i.e., abating more in early periods in order […]

Patterns of Transmission Investment

This paper examines a number of issues associated with alternative analytical approaches for evaluating investments in electricity transmission infrastructure and […]

Electricity Market Reform in the European Union: Review of Progress toward Liberalization & Integration

The energy market liberalisation process in Europe is increasingly focused on electricity market integration and related cross border issues. This […]

A Review of the Monitoring of Market Power: The Possible Roles of TSOs in Monitoring for Market Power Issues in Congested Transmission Systems

The paper surveys the literature and publicly available information on market power monitoring in electricity wholesale markets. After briefly reviewing […]

A Residential Energy Demand System for Spain

Sharp price fluctuations and increasing environmental and distributional concerns, among other issues, have led to a renewed academic interest in […]

Unraveling the Chinese Oil Puzzle

As oil prices rose in 2004, a large part of the blame was laid at the feet of the emerging […]

Gasoline Price Spikes and Regional Gasoline Content Regulations: A Structural Approach

Since 1999, gasoline prices in California, Illinois and Wisconsin have spiked occasionally well above gasoline prices in nearby states. In […]

Electricity Transmission Pricing: How Much Does it Cost to Get It Wrong?

Economists know how to calculate optimal prices for electricity transmission. These are rarely applied in practice. This paper develops a […]

The Chicago VOC Trading System: The Consequences of Market Design for Performance

The Chicago cap-and-trade approach to regulating stationary source VOC emissions in the Chicago ozone non-attainment area is a pioneering program […]

Does Competition Reduce Costs? Assessing the Impact of Regulatory Restructuring on U.S. Electric Generation Efficiency

Although the allocative efficiency benefits of competition are a tenet of microeconomic theory, the relation between competition and technical efficiency […]

Transmission Policy in the United States

This paper provides an overview of the development of electric power transmission access, pricing and investment policies in the U.S. […]

Electricity Reform in Chile: Lessons for Developing Countries

Chile was the first country in the world to implement a comprehensive reform of its electricity sector in the recent […]

Pollution Markets with Imperfectly Observed Emissions

I study the advantages of pollution permit markets over traditional standard regulations when the regulator has incomplete information on firms’ […]

Market Power in the England and Wales Wholesale Electricity

This paper shows that generators exercised increasing market power in the England and Wales wholesale electricity market in the second […]

Forward Trading and Collusion in Oligopoly

We consider an infinitely-repeated oligopoly in which at each period firms not only serve the spot market by either competing […]

Did English Generators Play Cournot? Capacity Withholding in the Electricity Pool

Electricity generators can raise the price of power by withholding their plant from the market. We discuss two ways in […]

Retail Electricity Competition

We analyze a number of unstudied aspects of retail electricity competition. We first explore the implications of load profiling of […]

Reliability and Competitive Electricity Markets

Despite all of the talk about “deregulation” of the electricity sector, a large number of non-market mechanisms have been imposed […]

Did the Clean Air Act Cause the Remarkable Decline in Sulfur Dioxide Concentrations?

Over the last three decades, ambient concentrations of sulfur dioxide (SO2) air pollution have declined by approximately 80%. This paper […]

Air Quality, Infant Mortality, and the Clean Air Act of 1970

We examine the effects of total suspended particulates (TSPs) air pollution on infant health using the air quality improvements induced […]

A Note on Market Power in an Emission Permits Market with Banking

In this paper, we investigate the effect of market power on the equilibrium path of an emission permits market in […]

The Option to Try Again: Valuing a Sequence of Dependent Trials

In various fields of economic endeavor, agents enjoy the option to “try, try again.” Failure in a particular pursuit often […]

Managing a Portfolio of Real Options: Sequential Exploration of Dependent Prospects

We consider the impact of sequential investment and active management on the value of a portfolio of real options. The […]

International Market Intergration for Natural Gas? A Cointergration Analysis of Prices in Europe, North America, and Japan

We examine the degree of natural gas market integration in Europe, North America and Japan, between the mid 1990’s and […]

The Sources of Emission Reductions: Evidence from U.S. SO2 Emissions from 1985 through 2002

An enduring issue in environmental regulation is whether to clean up existing “old” plants or in some manner to bring […]

Oil and Natural Gas Reserve Prices 1982-2002: Implications for Depletion and Investment Cost

A time series is estimated of in-ground prices – as distinct from wellhead prices – of US oil and natural […]

Electricity Sector Restructuring and Competition: Lessons Learned

We now have over a decade of experience with the privatization, restructuring, regulatory reform, and wholesale and retail competition in […]

Energy Policies and their Consequences After 25 Years

Hans Landsberg and Sam Schurr each led research teams that produced two important energy futures policy studies that were published […]

Volatility in Natural Gas and Oil Markets

Using daily futures price data, I examine the behavior of natural gas and crude oil price volatility since 1990. I […]

Diagnosing and Mitigating Market Power in Chile’s Electricity Industry

This paper examines the incentives to exercise market power that generators would face and the different strategies that they would […]

Lessons from Phase 2 Compliance with the U.S. Acid Rain Program

This paper provides preliminary answers to four questions concerning the behavior of agents operating under the SO2 Allowance Trading Program […]

The Difficult Transition to Competitive Electricity Markets in the U.S.

This paper provides a comprehensive discussion of the causes and consequences of state and federal initiatives to introduce wholesale and […]

Why did British Electricity Prices Fall After 1998?

In an attempt to reduce high electricity prices in England and Wales, the government and regulator forced the largest generators […]

Distinguishable Patterns of Competition, Collusion and Parallel Action

Alternative market structures are distinguishable by the degree of parallel action exhibited by producers. We show that the correlation between […]

Inscrutable OPEC? Behavioral Tests of the Cartel Hypothesis

We show that standard statistical tests of OPEC behavior have very low power across a wide range of alternative hypotheses […]

Merchant Transmission Investment

We examine the performance attributes of a merchant transmission investment framework that relies on “market driven” transmission investment to provide […]

Ex Post Evaluation of Tradable Permits: The U.S. SO2 Cap-and-Trade Program

The U.S. SO2 cap-and-trade program was established as a result of the enactment of the 1990 Clean Air Act Amendments […]

Trends and Breaks in Per-Capita Carbon Dioxide Emissions, 1870-2028

We consider per-capita carbon dioxide emission trends in 16 early developed countries over the period 1870-2028. Using a multiple-break time […]

Comments on FERC’s Standard Market Design Proposals

Comments of Professor Paul L. Joskow before the US Federal Energy Regulatory Commission on January 10, 2003 I respectfully submit […]

Transmission Pricing of Distributed Multilateral Energy Transactions to Ensure System Security and Guide Economic Dispatch

In this paper we provide a simulations-based demonstration of a hybrid electricity market that combines the distributed competitive advantages of […]

Costs of Aggregate Hydrocarbon Reserve Additions

In what follows, we highlight problems created by aggregation using fixed conversion coefficients (Section 1). We then offer an economic […]

Statement of Professor Paul L. Joskow Before The US Senate Committee on Govermental Affairs

Thank you for giving me the opportunity to appear here today to discuss issues associated with the restructuring of U.S. […]

Introducing Competition in the French Electricity Supply Industry: The Destabilisation of a Public Hierarchy in an Open Institutional Environment

The introduction of market rules in a electricity supply industry characterized by a vertically integrated monopoly and public ownership is […]

The Role of Content Regulation On Pricing and Market Power in Regional Retail and Wholesale Gasoline Markets

Since 1999, regional retail and wholesale gasoline markets in the United States have experienced significant price volatility, both intertemporally and […]

Auctions to gas transmission access: The British experience

When access to monopoly owned networks is constrained auctioning access rights can increase the efficiency of allocations relative to negotiation […]

Environmental Benefits and Cost Savings Through Market-Based Instruments: An Application Using State-Level Data from India

This paper develops a methodology for estimating potential cost savings from the use of market-based instruments (MBIs) when local emissions […]

Testing the Efficiency of a Tradeable Permits Market

A tradeable permits market is said to be efficient when all affected firms trade permits until their marginal costs equal […]

The Temporal Efficiency of SO2 Emissions Trading

This paper provides an empirical evaluation of the temporal efficiency of the U.S. Acid Rain Program, which implemented a nationwide […]

Analysis of the Bush Proposal to Reduce the SO2 Cap

This paper evaluates President Bush’s recent proposal to reduce the cap on total SO2 emissions using a model of emissions […]

Trading quasi-emission permits

I study the design of environmental policies for a regulator that has incomplete information on firms’ emissions and costs of […]

Considerations For Designing A Tradable Permit System To Control SO2 Emissions in China

As China’s economy has grown, atmospheric pollution has become a greater problem and a matter of increasing concern to policymakers […]

Multipollutant Markets

otherwise he should keep markets separated. I also find that incomplete enforcement reduces the advantage of market integration.

Volitility and Commodity Price Dynamics

Commodity prices tend to be volatile, and volatility itself varies over time. changes in volatility can affect market variables by […]

California’s Electricity Crisis

The collapse of California’s electricity restructuring and competition program has attracted attention around the world. Prices in California’s competitive wholesale […]

Creating the Wholesale Market for Electricity in Japan: What Should Japan Learn from Major Markets in the United States and Europe?

The movement of deregulation in Japan’s electric power industry started in 1995 with the revision of the Electric Utility Industry […]

U.S. Energy Policy During the 1990’s

This essay discusses U.S. energy policy and the associated evolution of energy supply, energy demand, energy prices and the industrial […]

The Effect of Falling Market Concentration on Prices, Generator Behaviour and Productive Efficiency in the England and Wales Electricity Market

A universal prediction of the various oligopoly models used to predict and explain behaviour in the England and Wales (E&W) […]

The Dynamics of Commodity Spot and Futures Markets: A Primer

I discuss the short-run dynamics of commodity prices, production, and inventories, as well as the sources and effects of market […]

Optimal Timing Problems in Environmental Economics

Because of the uncertainties and irreversibilities that are often inherent in environmental degradation, its prevention, and its economic consequences, environmental […]

Characteristics of North Sea Oil Reserve Appreciation

In many petroleum basins, and especially in more mature areas, most reserve additions consist of the growth over time of […]

The Wholesale Market for Electricity in England and Wales: Recent Developments and Future Reforms

The England and Wales wholesale electricity market is about to undergo major reform (NETA). I describe and analyse the proposed […]

Tax Effects upon Oil Field Development in Venezuela

Important reforms have been made to the oil sector tax code in Venezuela. Given its diversity of oil resources, there […]

A Market-Based Environmental Policy Experiment in Chile

Despite growing interest in the use of emissions trading for pollution control, empirical evidence for this regulatory instrument has been […]

Panel Data Analysis of U. S. Coal Productivity

We analyze labor productivity in coal mining in the United States using indices of productivity change associated with the concepts […]

Deregulation and Regulatory Reform in the U.S. Electric Power Sector

This paper discusses the evolution of wholesale and retail competition in the U.S electricity sector and associated industry restructuring and […]

Comments in Response to FERC Rulemaking on Regional Transmission Organizations

On May 13, 1999, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) on Regional Transmission […]

Transmission Rights and Market Power on Electric Power Networks I: Financial Rights

In many countries, infrastructure sectors that have historically been vertically integrated natural monopolies subject to public regulation, such as electric […]

Transmission Rights and Market Power on Electric Power Networks II: Physical Rights

In a companion paper (Joskow-Tirole 1998), we examined whether and how the allocation of financial transmission rights may enhance the […]

Environmental Policy in Transition Economies: The Effectiveness of Pollution Charges

Most economists and analysts claim that extended use of pollution charges in environmental policy will have substantial efficiency advantages in […]

Storage and Capacity Rights Markets in the Natural Gas Industry

This dissertation presents a different approach at looking at market power in capacity rights markets that goes beyond the functional […]

The Portfolio of Generation Facilities in Japan’s Electric Power Sector, Past and Future

Japan consumes a considerable amount of the world’s energy, and it occupies an even more important position in the markets […]

Crude Oil Supply Curve

Short-run cost curves shift over time as depletion counters increasing knowledge. Under competition, a rightward (leftward) shift indicates lower (higher) […]

Electric Utility Response to Allowances: From Autarkic to Market-Based Compliance

Allowances are a central feature of Title IV; and, from the time Title IV was enacted, there has been concern […]

Explaining Low Sulfur Dioxide Allowance Prices: The Effect of Expectation Errors and Irreversibility

The low price of allowances has been a frequently noted featured of the implementation of the sulfur dioxide emissions market […]

Natural Gas Pricing in the Northeastern U.S.

This paper examines natural gas pricing at five citygate locations in the northeastern United States using daily and weekly price […]

The Long-Run Evolution of Energy Prices

I examine the long-run behavior of oil, coal, and natural gas prices, using up to 127 years of data, and […]

Allowance Trading Activity and State Regulatory Rulings: Evidence From The U. S. Acid Rain Program

The U.S. Acid Rain Program is one of the first, and by far the most extensive, applications of a market […]

Intertemporal Pricing of Sulfur Dioxide Allowances

The Clean Air Act Amendments of 1990 initiated the first large-scale use of the tradable permit approach to pollution control. […]

The Economics of Pollution Permit Banking in the Context of Title IV of the 1990 Clean Air Act Amendments

Tradable pollution permits are the basis of a new market-based approach to environmental control. The Acid Rain Program, established under […]

Economic Development and the Structure of the Demand for Commercial Energy

To deepen the understanding of the relation between economic development and energy demand, this study estimates the Engel curves that […]

The Geographic Expanse of the Market for Wholesale Electricity

This paper develops new techniques to assess the expanse of the geographic market under varying supply and demand conditions and […]

Sources of Productivity Growth in the American Coal Industry

This paper exploits a large mine-level database to contribute to our understanding of the micro-sources of productivity growth. The database […]

Voluntary Compliance with Market-Based Environment Policy: Evidence from the U.S. Acid Rain Program

The U.S. acid rain program, Title IV of the 1990 Clean Air Act Amendments, is a pioneering experience in environmental […]

Expandability, Reversibility, and Optimal Capacity Choice

We develop continuous-time models of capacity choice when demand fluctuates stochastically, and the firm’s opportunities to expand or contract are […]

Optimal Design of a Phase-in Emissions Trading Program with Voluntary Compliance Options

otherwise a second-best equilibrium is implemented. The latter is sensitive to uncertainty in control costs and benefits.

A Markup Interpretation of Optimal Rules for Irreversible Investment

we show that this trade-off is closely analogous to the standard trade-off for the pricing decision of a firm that faces a downward sloping demand curve. We reinterpret the optimal investment rule as a markup formula involving an elasticity that has exactly the same form as the formula for a firm’s optimal markup of price over marginal cost. This is illustrated with several examples.

Race, Waste and Long-Run Outcomes

Andrew B. Bernard, September 1996We examine the hypothesis that hazardous waste facilities are disproportionately located in minority neighborhoods. We also ask […]

Greenhouse Policy Architectures and Institutions

Auction Design and the Market for Sulfur Dioxide Emissions

Paul L. Joskow, Richard Schmalensee, and Elizabeth M. Bailey, August 1996Title IV of the Clean Air Act Amendments of 1990 created […]

A Review of Oil Production Capacity Expansion Costs for the Persian Gulf

M.A. Adelman, August 1996The U.S. Energy Information Agency has recently published a report prepared by Petroconsultants, Inc. that addresses the cost […]

The Competition Between Coal and Natural Gas: The Importance of Sunk Costs

A. Denny Ellerman, July 1996This paper explores the seeming paradox between the predominant choice of natural gas for capacity additions to […]

The Value of United States Oil and Gas Reserves

M.A. Adelman and G.C. Watkins, May 1996The object of this research is to estimate a time series, starting in 1979, for […]

Allowance Trading Activity and State Regulatory Rulings: Evidence from the U.S. Acid Rain Program

Elizabeth M. Bailey, March 1996Please see the update to this paper: WP-98005 – Allowance Trading Activity and State Regulatory Rulings: Evidence from […]

Why Are Allowance Prices So Low? An Analysis of the SO2 Emissions Trading Program

A. Denny Ellerman and Juan Pablo Montero, February 1996This paper presents an analysis of the reduction in SO2 emissions by electric […]

Household Gasoline Demand in the United States

Richard Schmalensee and Thomas M. Stoker, August 1995Continuing rapid growth in U.S. gasoline consumption threatens to exacerbate environmental and congestion problems. […]

Options, the Value of Capital, and Investment

Andrew B. Abel, Avinash K. Dixit, Janice C. Eberly, and Robert S. Pindyck, June 1995Capital investment decisions must recognize the limitations […]

The New Option View of Investment

Avinash K. Dixit and Robert S. Pindyck, February 1995This paper provides a simple introduction to the new option view of investment. […]

The World Price of Coal

A. Denny Ellerman, November 1994A significant increase in the seaborne trade for coal over the past twenty years has unified formerly […]

Implementing Environmental Taxes on Intermediate Goods in Open Economies

James M. Poterba and Julio J. Rotemberg, June 1994Many proposed and actual environmental taxes are taxes on intermediate goods. These goods, […]

Evaluation of Capacity Release Transactions in the Natural Gas Industry

Stephen Lautzenhiser and Scott McDonald, June 1994The purpose of this thesis is to analyze capacity release transactions in the natural gas […]

Trade in Waste Among Developed Countries: Evidence and Origins

Andrew B. Bernard and Pamela H. Chang, June 1994In this paper, we examine the determinants of the international trade in waste […]

Deregulation in Japanese Gas Industries

Masayuki Inoue, March 1994In recent years, the circumstances surrounding Japanese City gas industries have been changing drastically. On one hand, as […]

Option Valuation of Flexible Investments: The Case of a Coal Gasifier

Olivier Herbelot, March 1994This paper examines the use of contingent claim analysis to evaluate the option of retrofitting a coal gasifier […]

Option Valuation of Flexible Investments: The Case of a Scrubber for Coal-Fired Power Plant

Olivier Herbelot, March 1994Standard discounted cash flow methods are not well suited to the valuation of investments whose characteristics can be […]

Fuel Costs and the Retirement of Capital Goods

Austan Goolsbee, December 1993This paper explores the effect that energy prices and market conditions have on the retirement rates of capital […]

The Costs of Environmental Protection

Richard Schmalensee, October 1993Recently, some have argued that tougher environmental policies can create jobs, stimulate innovation, and enhance competitiveness. On this […]

Nonparametric Estimation of Exact Consumers Surplus and Deadweight Loss

Jerry A. Hausman and Whitney K. Newey, September 1993We apply nonparametric regression models to estimation of demand curves of the type […]

BOOK REVIEW: Three Books on Global Climate Change

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Climate Change and Agriculture: Global and Regional Effects Using an Economic Model of International Trade

John Reilly, Neil Hohmann, and Sally Kane, August 1993Empirical estimates of the economic welfare implications of the impact of climate change […]

Global Warming: A Public Finance Perspective

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Toward Economic Evaluation of Climate Change Impacts: A Review and Evaluation of Studies of the Impact of Climate Change

John Reilly and Chris Thomas, June 1993Efforts to access climate change have generally been unsuccessful in describing the economic damages (or […]

Semiparametric Measurement of Environmental Effects

Diego Rodriguez and Thomas M. Stoker, June 1993This paper gives the results of a semiparametric analysis of pollution effects on housing […]

What Does a Negawatt Really Cost? Further Thoughts and Evidence

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Regulatory Constraints on Executive Compensation

Paul L. Joskow, Nancy Rose, and Andrea Shepard, March 1993This paper explores the influence of economic regulation on the level and […]

Comparing Greenhouse Gases for Policy Purposes

Richard Schmalensee, March 1993In order to derive optimal policies for greenhouse gas emissions control, the discounted marginal damages of emissions of […]

Economic Instability and Aggregate Investment

Robert S. Pindyck and Andrés Solimano, March 1993A recent literature suggests that because investment expenditures are irreversible and can be delayed, […]

Discounting Rules for Risky Assets

Stewart C. Myers and Richard S. Ruback, Revised January 1993This paper develops a new rule for calculating the discount rate to […]

The Effects of Hazardous Waste Taxes on Generation and Disposal of Chlorinated Solvent Waste

Hilary Sigman, October 1992In 1989, 30 states levied taxes on e generation or management of hazardous waste. These taxes constitute […]

Interpreting the IPCC Emissions Scenarios

Robert M. Margolis, October 1992This paper discusses how two sets of emissions scenarios, generated using the Atmospheric Stabilization Framework, were used […]

Statistical Issues in the Assessment of Undiscovered Oil and Gas Resources

Gordon M. Kaufman, September 1992Prior to his untimely death, my friend Dave Wood gave me wise counsel about how best to […]

Uncertainty, Investment, and Industry Evolution

Ricardo J. Caballero and Robert S. Pindyck, August 1992We study the effects of aggregate and idiosyncratic uncertainty on the entry of […]

Energy and Environmental Policy and Electric Utilities’ Choice under Uncertain Global Warming

Masaki Takahashi, August 1992The paper reviews and discusses uncertainty about global warming science, impact on society. It also discusses what […]

A Comparison of Public Policies for Lead Recycling

Hilary Sigman, June 1992Policies that encourage recycling may be used to reduce environmental costs from waste disposal when direct restrictions on […]

A Regression Test of Semiparametric Index Model Specification

Diego Rodriguez and Thomas M. Stoker, June 1992This paper presents a simple regression test of parametric and semiparametric index models against […]

Investments of Uncertain Cost

Robert S. Pindyck, March 1992I study irreversible investment decisions when projects take time to complete, and are subject to two types […]

Reserve Asset Values and the “Hotelling Valuation Principle”””””””

M.A. Adelman and G.C. Watkins, March 1992The Hotelling Valuation Principle, that the in-situ value of a mineral unit equals the current […]

OPEC at High Noon 1974-1981

M.A. Adelman, February 1992After 1973, oil consumption stagnated worldwide. Non-OPEC output increased, mostly in Alaska, Mexico, and the North Sea, but […]

Rail Costs and Capital Adjustments in a Quasi Regulated Environment

Ann F. Friedlaender, Ernst R. Berndt, Judy Shaw-Er Wang Chiang, Mark Showalter, and Christopher A. Vellturo, September 1991This paper reports on […]

A General Equilibrium Analysis of the Effects of Carbon Emission Restrictions on Economic Growth in a Developing Country

Charles R. Blitzer, Richard S. Eckaus, Supriya Lahiri, and Alexander Meeraus, June 1990A general equilibrium approach, in the form of a […]

The Potential for Reducing Carbon Emissions from Increased Efficiency: A General Equilibrium Methodology

Charles R. Blitzer, Richard S. Eckaus, Supriya Lahiri, and Alexander Meeraus, May 1990This paper presents a methodology for analyzing the potential […]

USA Oil/Gas Production Cost: Recent Changes

M.A. Adelman, February 1991During 1984-1989, oil development investment cost in the USA fell, but only because of lower activity. The whole […]

A Note on Competitive Investment under Uncertainty

Robert S. Pindyck, August 1991This paper clarifies how uncertainty affects irreversible investment in a competitive market equilibrium. With free entry, irreversibility […]

The Present Value Model of Rational Commodity Pricing

Robert S. Pindyck, July 1991The present value model says that an asset’s price equals the sum of current and future discounted […]

Energy Conservation Policy in Developing Countries: The Case for Market Solutions

R.W. Bates, July 1991Interest in energy conservation, although to some degree cyclical, has been stimulated during the last twenty years by […]

Testimony on Electricity Policy Issues Before the Subcommittee on Energy and Power, House Committee on Energy and Commerce

Paul L. Joskow, March 1991This testimony discusses the changing structure of the electricity industry and some of the public policy issues […]

Tax Policy To Combat Global Warming: On Designing a Carbon Tax

James M. Poterba, March 1991This paper develops several points concerning the design and implementation of a carbon tax. First, if implemented […]

Contractual Form, Retail Price and Asset Characteristics

Andrea Shepard, Revised January 1992Predictions derived from a principal-agent analysis of the manufacturer-retailer relationship are derived and tested using microdata on […]

Planning for Future Uncertainties in Electric Power Generation: An Analysis of Transitional Strategies for Reduction of Carbon and Sulfur Emissions

R.D. Tabors and Burt L. Monroe, January 1991The object of this paper is to identify strategies for the U.S. electric utility […]

A Two-Method Solution to the Investment Timing Option

Henry Jacoby, December 1990Within the realm of derivative asset valuation, two types of methods are available for solving the investment timing […]

Comparing the Effects of Greenhouse Gas Emissions on Global Warming

Richard S. Eckaus, November 1990Policies dealing with global warming require a measure of the effects of the emissions of greenhouse gases […]

Is the Gasoline Tax Regressive?

James M. Poterba, October 1990Claims of the regressivity of gasoline taxes typically rely on annual surveys of consumer income and expenditures […]

User Cost in Oil Production

M.A. Adelman, October 1990The assumption of an initial fixed mineral stock is superfluous and wrong. User cost (resource rent) in mineral […]

Rail Costs and Capital Adjustments in a Quasi-Regulated Environment

Anne F. Friedlaender, Ernst R. Berndt, Judy Shaw-Er Wang Chiang, and Christopher A. Vellturo, June 1990This paper reports on results obtained […]

The Agency Cost of Alternative Debt Instruments

Antonio Mello and John Parsons, Revised June 1990In this paper we show how to adapt the traditional contingent claims valuation techniques […]

The Economics of Rotating Savings and Credit Associations

Timothy Besley, Stephen Coate, and Glenn Loury, May 1990This paper examines the role and performance of an institution for allocating savings […]

Auction Design and Favoritism

Jean-Jacques Laffont and Jean Tirole, December 1989The theory of auctions has ignored the fact that often auction designers, not the principal, […]

The Politics of Government Decision Making: Regulatory Institutions

Jean-Jacques Laffont and Jean Tirole, September 1989Public decision makers are given a vague mandate to regulate industries. Restrictions on their instruments […]

Vertical Integration and Market Foreclosure

Oliver Hart and Jean Tirole, April 1990Few people would disagree with the proposition that horizontal mergers have the potential to restrict […]

Pricing Behavior and Vertical Contracts in Retail Markets

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Do Stock Prices Move Together Too Much?

Robert S. Pindyck and Julio Rotemberg, April 1990We show that comovements of individual stock prices cannot be justified by economic fundamentals. […]

Irreversibility, Uncertainty, and Investment

Robert S. Pindyck, March 1990Most investment expenditures have two important characteristics. First, they are largely irreversible; the firm cannot disinvest, so […]

Energy Use, Technical Progress and Productivity Growth: A Survey of Economic Issues

Ernst R. Berndt, March 1990This is a survey paper for non-specialists on interactions between energy and productivity growth. The first half […]

Inventories and the Short-Run Dynamics of Commodity Prices

Robert S. Pindyck, March 1990I examine the behavior of inventories and their role in the short-run dynamics of commodity production and […]

Irreversibility and the Explanation of Investment Behavior

Robert S. Pindyck, January 1990The explanation of aggregate and sectoral investment behavior has been one of the less successful endeavors in […]

One for You, Three for Me…or… The Design of Optimal Production Sharing Rules for a Petroleum Exploration Venture

Philip Hampson, John Parsons, and Charles Blitzer, Revised July 1990This is a case study in the design of the production sharing […]

Large Scale Wind Power Investment’s Impact on Wholesale Electricity Markets

Renewable subsidies are an influential device for wind power investment. These policies help lower emissions by offsetting high-emitting electricity generation […]

Global Externalities, Local Policies, and Firm Selection

How to fight global problems with local tools? When only firms know what externality-producing activities can be relocated, policies shape […]

The Value of Nuclear Microreactors in Providing Heat and Electricity to Alaskan Communities

We evaluated the system cost of providing electricity and heat to serve the load profiles of two types of Alaskan […]

Advancing International Cooperation under the Paris Agreement: Issues and Options for Article 6

Article 6 of the Paris Agreement allows Parties to cooperate by transferring mitigation outcomes, promising significant reductions in the cost […]

Technology Adoption and Early Network Infrastructure Provision in the Market for Electric Vehicles

We document non-linear stock effects in the relationship linking emerging technology adoption and network infrastructure increments. We exploit 2010-2017 data […]

Creating a Smarter U.S. Electricity Grid

This paper focuses on efforts to build what policymakers call the “smart grid,” involving 1) improved remote monitoring and automatic […]

Reducing Petroleum Consumption from Transportation

The United States consumed more petroleum-based liquid fuel per capita than any other OECD- high-income country- 30 percent more than […]

Improving Regulatory Performance: Lessons from the United Kingdom

Testimony of Michael Greenstone before the Senate Budget Committee Task Force on Government Performance November 16, 2011 I appreciate the […]

An Approximate Dynamic Programming Framework for Modeling Global Climate

Analyses of global climate policy as a sequential decision under uncertainty have been severely restricted by dimensionality and computational burdens. […]

Fuel Prices and New Vehicle Fuel Economy in Europe

This paper evaluates the effect of fuel prices on new vehicle fuel economy in the eight largest European markets. The […]

Some Inconvenient Truths About Climate Change Policy: The Distributional Impacts of Transportation Policies

Instead of efficiently pricing greenhouse gases, policy makers have favored measures that implicitly or explicitly subsidize low carbon fuels. We […]

Environmental Regulations, Air and Water Pollution, and Infant Mortality in India

Using the most comprehensive data file ever compiled on air pollution, water pollution, environmental regulations, and infant mortality from a […]

Caution, Drivers! Children Present: Traffic, Pollution, and Infant Health

Since the Clean Air Act Amendments of 1990 (CAAA), atmospheric concentration of local pollutants has fallen drastically. A natural question […]

The Importance of Research and Development (R&D) for U.S. Competitiveness and a Clean Energy Future

I am grateful for the opportunity to speak today about two interrelated challenges that our country faces. The first is […]

Liability and Financial Responsibility for Oil Spills under the Oil Pollution Act of 1990 and Related Statutes

Testimony of Michael Greenstone before the U.S. House Committee on Transportation and Infrastructure June 9, 2010 I appreciate the opportunity […]

Evaluating Policies to Increase the Generation of Electricity from Renewable Energy

Focusing on the U.S. and the E.U., this essay seeks to advance four main propositions. First, the incidence of the […]

The Dynamic Effects of Hurricanes in the US: The Role of Non-Disaster Transfer Payments

We know little about the dynamic economic impacts of natural disasters. I examine the effect of hurricanes on US counties’ […]

Estimating the Social Cost of Carbon for Use in U.S. Federal Rulemakings: A Summary and Interpretation

The United States Government recently concluded a year-long process to develop a range of values representing the monetized damages associated […]

Superfund Cleanups and Infant Health

We are the first to examine the effect of Superfund cleanups on infant health rather than focusing on proximity to […]

Subglobal Climate Agreements and Energy-Intensive Activities: Is there a Carbon Haven for Copper?

Subglobal climate policies induce changes in international competitiveness and favor a relocation of carbon-emitting activities. We argue that many energy-intensive […]

Stocks & Shocks: A Clarification in the Debate Over Price vs. Quantity Controls for Greenhouse Gases

We construct two simple examples that help to clarify the role of a key assumption in the analysis of price […]

Review of Support Schemes for Renewable Energy Sources in South America

This article reviews the current experiences implemented to date in the South American region to promote non-conventional renewable energy sources. […]

Local and Seasonal Effects in the U.S. of Global Climate Change

Though the facts of global climate change are beyond doubt, there has been relatively limited information about its local consequences. […]

CO2 Abatement from Renewable Energy Injections in the German Electricity

The overlapping impact of the Emission Trading System (ETS) and renewable energy (RE) deployment targets creates a classic case of […]

Paying Too Much for Energy? The True Costs of Our Energy Choices

Energy consumption is critical to economic growth and quality of life. America’s energy system, however, is malfunctioning. The status quo […]

The Future of Nuclear Power After Fukushima

This paper analyzes the impact of the Fukushima accident on the future of nuclear power around the world. We begin […]

Using Vehicle Taxes to Reduce Carbon Dioxide Emissions Rates of New Passenger Vehicles: Evidence from France, Germany, and Sweden

France, Germany, and Sweden link vehicle taxes to the carbon dioxide (CO2) emissions rates of passenger vehicles. Based on new […]

The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment

Two decades have passed since the Clean Air Act Amendments of 1990 launched a grand experiment in market-based environmental policy: […]

Do Housing Prices Reflect Environmental Health Risks? Evidence from More than 1600 Toxic Plant Openings and Closings

A ubiquitous and largely unquestioned assumption in studies of housing markets is that there is perfect information about local amenities. […]

Hit or Miss: Regulating Derivative Markets to Reduce Hedging Costs at Non-Financial Companies

Derivative markets are an important tool enabling non-financial companies to reduce their risk and manage their financing. Effective regulation of […]

Market-Based Emissions Regulation and Industry Dynamics

We assess the long-run dynamic implications of market-based regulation of carbon dioxide emissions in the US Portland cement industry. We […]

The Cost of Abating CO2 Emissions by Renewable Energy Incentives in Germany

Incentives for the development of renewable energy have increasingly become an instrument of climate policy, that is, as a means […]

Who is Exposed to Gas Prices? How Gasoline Prices Affect Automobile Manufacturers and Dealerships

Many consumers are keenly aware of gasoline prices, and consumer responses to gasoline prices have been well studied. In this […]

Mapping and Measuring the Channels of Oil Price Exposure in the Economy and the Role of Oil Derivatives in Reshaping Them

This paper provides a framework for understanding how the trade in oil derivatives relates to the physical production and use […]

Truth-telling by Third-party Auditors and the Response of Polluting Firms: Experimental Evidence from India

In many regulated markets, private, third-party auditors are chosen and paid by the firms that they audit, potentially creating a […]

Explaining the Adoption of Diesel Fuel Passenger Cars in Europe

Compared with gasoline engines, diesel fuel engines significantly reduce fuel consumption and greenhouse gas emissions from passenger vehicles, but they […]

Risk Sharing in CO2 Delivery Contracts for the CCS-EOR Value Chain

A key reason for poor performance in large capital projects is the weak incentives facing the involved entities to deliver […]

Early Nuclear Retirements in Deregulated U.S. Markets: Causes, Consequences and Policy Options

Electricity prices have fallen significantly since 2008, putting commercial nuclear reactors in the United States under substantial financial pressure. In […]

Joint Allocation of Climate Control Mechanisms is the Cheapest Way to Reduce Global Climate Damage

Coupling the modes of action of four different climate control mechanisms: emission reduction, CO2 removal, adaptation, and geoengineering can greatly […]

Policies for Electrifying the Light-Duty Vehicle Fleet in the United States

The decarbonization of the light-duty vehicle (LDV) fleet in the United States is an important policy priority for the coming […]

Intermittent versus Dispatchable Power Sources: An Integrated Competitive Assessment

The cost and revenue earnings potential of alternative power generation sources has shifted considerably in recent years. Here we introduce […]

Water for a Warming Climate: A Feasibility Study of Repurposing Diablo Canyon Nuclear Power Plant for Desalination

We consider the techno-economic feasibility of constructing a large-scale reverse osmosis desalination plant at the Diablo Canyon Nuclear Power Plant […]

Challenges and Opportunities for Decarbonizing Power Systems in the US Midcontinent

As a central element of its climate policy agenda, the Biden Administration has declared a goal to decarbonize the national […]

A Domestic Content Rule for Electric Vehicle Lithium-Ion Batteries Will Protect U.S. Jobs

The International Energy Agency projects on the basis of national government expressed intentions, that global electric vehicle, EV, deployments are […]

Facilitating Transmission Expansion to Support Efficient Decarbonization of the Electricity Sector

Many governments, electric utilities, and large electricity consumers have committed to deep decarbonization of the electricity sector by 2050 or […]

From Hierarchies to Markets and Partially Back Again in Electricity: Responding to Deep Decarbonization Commitments and Security of Supply Criteria

Electric power sectors around the world have changed dramatically in the last 25 years as a result of sector liberalization […]

Energy Conversion and Storage: The Value of Reversible Power-to-Gas Systems

Power-to-Gas technology has recently experienced lower acquisition costs and lower conversion efficiency losses. At the same time, wholesale power markets […]

Policy Options to Enable an Equitable Energy Transition

As the United States undergoes an unprecedented shift away from carbon-intensive energy sources and towards a clean energy future, federal […]

Are “Complementary Policies” Substitutes? Evidence from R&D Subsidies in the UK

Governments often subsidize private R&D using both direct subsidies and tax incentives. In this paper, I develop a framework for […]

Economics of Grid-Scale Energy Storage in Wholesale Electricity Markets

The transition to a low-carbon electricity system is likely to require grid-scale energy storage to smooth the variability and intermittency […]

Resilient Decarbonization for the United States: Lessons for Electric Systems from a Decade of Extreme Weather

The past decade has seen an unprecedented surge of climate change-driven extreme weather events that have wrought over $800 billion […]

Grid Impacts of Highway Electric Vehicle Charging and the Role for Mitigation via Energy Storage

Highway fast-charging (HFC) stations for electric vehicles (EVs) are necessary to address range anxiety concerns and thus to support economy-wide […]

Learning from Supply Shocks in the Energy Market: Evidence from Local and Global Impacts of the Shale Revolution

In this paper, we carry out three studies of the local and global impacts of supply shocks in energy markets, […]

Energy Storage Investment and Operation in Efficient Electric Power Systems

We consider welfare-optimal investment in and operation of electric power systems with constant returns to scale in multiple available generation […]

A Machine Learning Approach to Evaluating Renewable Energy Technology: An Alternative LACE Study on Solar Photo-Voltaic (PV)

Currently, renewable technologies are often evaluated using the Levelized cost of electricity (LCOE), which is a measure of building and […]

Trade-offs in Climate Policy: Combining Low-Carbon Standards with Modest Carbon Pricing

To design climate policy decision makers must choose from a variety of policy options such as carbon pricing and low-carbon […]

Going Beyond Default Intensities in an EU Carbon Border Adjustment Mechanism

As part of its Green Deal, the European Union is currently preparing a “Carbon Border Adjustment Mechanism” (CBAM). A CBAM […]

Distributional Effects of Net Metering Policies and Residential Solar Plus Behind-the-meter Storage Adoption

Net metering schemes (NEM), typically implemented to incentivize investment on distributed energy resources (DER), could be regressive, given that DER […]

The Roosevelt Project: A New Deal for Employment, Energy and Environment

Advocates for addressing climate change point to the urgency of accelerating a low-carbon energy transition and the benefits that can […]

Assessing the Role of Public Policy in Industrial Transitions: How Distinct Regional Contexts Inform Comprehensive Planning

Major industrial transitions in the United States led to highly divergent community outcomes. As the nation transitions to a deeply […]

Social Impacts of Energy Transition

What happens to people and places as communities transition from one form of energy production and consumption to another? How […]

Distributed Effects of Climate Policy: A Machine Learning Approach

We employ machine learning techniques to estimate household carbon footprints (HCFs) for the average household in each Census tract—geographic areas […]

Building the Energy Infrastructure Necessary for Deep Decarbonization throughout the United States

The world must rapidly shift to clean energy sources in order to avoid causing additional, catastrophic damage to the climate. […]

Public Attitudes on Energy and the Climate

Government actions to counteract climate change must take into account how Americans view the climate crisis and what they believe […]

Just Institutions for Deep Decarbonization? Essential Lessons from 20th Century Regional Economic and Industrial Transitions in the United States

Deep decarbonization of existing economies may still avert the worst of catastrophic global climatic disruption. As political discourse in the […]

Energy Workforce Development in the 21st Century

Solutions to climate change will require the mass deployment of new energy technologies and infrastructure. Two fundamental questions emerge from […]

Energy and Manufacturing in the United States

The Energy sector is critical to the economic vitality of the United States, but has been undergoing significant change in […]

Fostering Innovative Growth in Regions Exposed to Low Carbon Transition

Sources of innovative growth have the potential to mitigate the localized adverse impacts of a low-carbon energy transition. Transitions themselves […]

Quantifying the Distributional Impacts of Rooftop Solar PV Adoption Under Net Energy Metering

We show that residential rooftop solar photovoltaics (PV) adoption under typical electricity tariffs that inefficiently recover residual costs through volumetric […]

State Ownership and Technology Adoption: The Case of Electric Utilities and Renewable Energy

Technological change in industries that are characterized by large technical systems often occurs incrementally along given technological trajectories. Given pressing […]

The Short-run and Long-run Effects of COVID-19 on Energy and the Environment

In this commentary, we explore how the short-run effects of Covid-19 in reducing CO2 and local air pollutant emissions can […]

Competitive Energy Storage and the Duck Curve

Power systems with high penetrations of solar generation need to replace solar output when it falls rapidly in the late […]

Evolving Bidding Formats and Pricing Schemes in US and Europe Day-Ahead Electricity Markets

The ability of power system participants to trade in short-term power markets is not only limited by grid constraints, but […]

A Multi-control Climate Policy Process for a Designated Decision Maker

Persistent greenhouse gas (GHG) emissions threaten global climate goals and have prompted consideration of climate controls supplementary to emissions mitigation. […]

Abatement Strategies and the Cost of Environmental Regulation: Emission Standards on the European Car Market

This paper studies the introduction of an EU-wide emission standard on the automobile market. Using panel data from 1998-2011, I […]

What We Know and Don’t Know About Climate Change, and Implications for Policy

There is a lot we know about climate change, but there is also a lot we don’t know. Even if […]

What Does and Does Not Correlate with COVID-19 Death Rates

We correlate county-level COVID-19 death rates with key variables using both linear regression and negative binomial mixed models, although we […]

Electrifying Transportation: Issues and Opportunities

In this chapter of the forthcoming Handbook on the Economics of Electricity, we examine the global implications of electrifying the […]

The Value of Pumped Hydro Storage for Deep Decarbonization of the Spanish Grid

This paper addresses the role of pumped hydro storage (PHS) to decarbonization of the electricity sector using Spain’s power system […]

Welfare Costs of Catastrophes: Lost Consumption and Lost Lives

Most of the literature on the economics of catastrophes assumes that such events cause a reduction in the stream of […]

Optimality Conditions and Cost Recovery in Electricity Markets with Variable Renewable Energy and Energy Storage

We formulate generation capacity portfolio planning in the power grid as a least-cost optimization problem and derive analytical expressions for […]

Climate Policy Without a Price Signal: Evidence on the Implicit Carbon Price of Energy Efficiency in Buildings

Based on data for a portfolio of 548 multi-unit buildings observed over 16 years, we quantify the impacts of more […]

Two-Way Trade in Green Electrons: Deep Decarbonization of the Northeastern U.S. and the Role of Canadian Hydropower

Meeting climate policy targets in the U.S. Northeast will likely require the nearly complete decarbonization of electricity generation. To that […]

Designing Effective Auctions for Renewable Energy Support

Governments use procurement auctions for renewable energy support to stimulate investment in renewable energy. The main challenge in auction design […]

Using Machine Learning to Target Treatment: The Case of Household Energy Use

We use causal forests to evaluate the heterogeneous treatment effects (TEs) of repeated behavioral nudges towards household energy conservation. The […]

Social Comparison and Energy Conservation in a Collective Action Context: A Field Experiment

This field experiment quantifies the impact of social norm information on the demand for indoor temperature. Based on high-frequency data […]

Machine Learning for Solar Accessibility: Implications for Low-Income Solar Expansion and Profitability

The solar industry in the United States typically uses a credit score such as the FICO score as an indicator […]

Driving Behavior and the Price of Gasoline: Evidence from Fueling-Level Micro Data

We use novel microdata on on-road fuel consumption and prices paid for fuel in Japan to estimate short-run elasticities of […]

Strengths and Weaknesses of Traditional Arrangements for Electricity Supply

This essay provides a broad-brush comparison of performance under traditional arrangements for electricity supply with those that emerged after the […]

Investigating the Necessity of Demand Characterization and Stimulation for Geospatial Electrification Planning in Developing Countries

Despite substantial progress in recent years, the global community is projected to fall short in its goal to achieve universal […]

Crackdowns in Hierarchies: Evidence from China’s Environmental Inspections

We study how state-led crackdowns under conditions of urgency effect firm behavior. By linking the timing of centralized dispatch of […]

Estimating the Costs and Benefits of Fuel-Economy Standards

Fuel-economy standards for new vehicles are a primary policy instrument in many countries to reduce the carbon footprint of the […]

Providing the Spark: Impact of Financial Incentives on Battery Electric Vehicle Adoption

To overcome adoption barriers and promote battery electric vehicles (BEVs) as an energy efficient consumer transportation option, a number of […]

Diary of a Wimpy Carbon Tax: Carbon Taxes as Federal Climate Policy

In this short note, I use MIT’s Emissions Prediction and Policy Analysis (EPPA) Model to calculate the carbon tax required […]

Spatial and Temporal Variation in the Value of Solar Power across United States Electricity Markets

The cost of utility-scale photovoltaics (PV) has declined rapidly over the past decade. Yet increased renewable electricity generation, decreased natural […]

Decentralized Economic Dispatch for Radial Electric Distribution Systems

Electricity power systems, typically a very slow-moving and traditional industry, is in a state of flux as technological innovations, such […]

On the Efficiency of Competitive Energy Storage

When energy storage is employed to facilitate large-scale integration of intermittent renewable electricity generation, do competitive bulk power markets continue […]

Optimal Commodity Taxation with a Non-Renewable Resource

We obtain a formula for how non-renewable resources should be taxed when governments need to collect commodity tax revenues: This […]

Generational Trends in Vehicle Ownership and Use: Are Millennials Any Different?

Anecdotes that Millennials fundamentally differ from prior generations are numerous in the popular press. One claim is that Millennials, happy […]

Shared Capacity and Levelized Cost with Application to Power-to-Gas Technology

Ambiguity in calculating unit cost continues to spur debate on how to account for operating assets in managerial decisions, especially […]

Competition for Electric Transmission Projects in the U.S.: FERC Order 1000

Historically, high voltage electric transmission facilities in the U.S. have been owned and operated primarily by incumbent utilities subject to […]

Fuel-switching and Deep Decarbonization

Fuel-switching is inevitable to achieve deep decarbonization. Humanity has used approximately two-thirds of the carbon budget compatible with the goal […]

Machine Learning from Schools about Energy Efficiency

In the United States, consumers invest billions of dollars annually in energy efficiency, often on the assumption that these investments […]

The Efficiency and Distributional Effects of Alternative Residential Electricity Rate Designs

Electricity tariffs typically charge residential users a volumetric rate that covers the bulk of energy, transmission, and distribution costs. The […]

Challenges for Wholesale Electricity Markets with Intermittent Renewable Generation at Scale: The U.S. Experience

The supply of intermittent wind and solar generation with zero marginal operating cost is increasingly rapidly in the U.S. These […]

The Carbon Footprint of Bitcoin

Blockchain began with Bitcoin, which was the first successful attempt to validate transactions via a decentralized data protocol. Participation in […]

Governing Cooperative Approaches Under the Paris Agreement

Parties to the Paris Agreement can engage in voluntary cooperation and use internationally transferred mitigation outcomes towards their national climate […]

The Climate and Economic Rationale for Investment in Life Extension of Spanish Nuclear Power Plants

Spain’s seven operating nuclear plants currently provide more than 20% of its electricity. Each of these began operation in the […]

Dynamic Competition and Arbitrage in Electricity Markets: The Role of Financial Players

I study the role of purely financial players in electricity markets, where they trade alongside physical buyers and sellers. Using […]

Energy Efficiency, Information, and the Acceptability of Rent Increases: A Multiple Price List Experiment with Tenants

This paper studies the role of imperfect information and attentional biases in the context of energy efficiency investments in rented […]

Does the U.S. Export Global Warming? Coal Trade and the Shale Gas Boom

We examine the effect of the U.S. Shale Gas Boom on global trade and consumption of coal and CO2 emissions. […]

Fair, Equitable, and Efficient Tariffs in the Presence of Distributed Energy Resources

Distributed energy resources (DERs) hold the potential to deliver substantial benefits to the power system. However, under traditional tariff schemes, […]

Coordinating Separate Markets for Externalities

We show that inefficiencies from having separate markets to correct an environmental externality are significantly mitigated when firms participate in […]

Ownership and Collusive Exit: Theory and a Case of Nuclear Phase-out

In a declining market each firm hopes others will exit first. Collusive cross-ownership removes this war of attrition: it achieves […]

Evaluating the Energy Efficiency Gap & Measuring Savings from Fault Detection Diagnostics

According to the International Energy Agency, energy efficiency programs make up 72% of global greenhouse gas abatement strategies. However, there […]

Resource Adequacy with Increasing Shares of Wind and Solar Power: A Comparison of European and U.S. Electricity Market Designs

We raise the question if improvements to current energy-only markets are sufficient to maintain resource adequacy in electricity markets or […]

Restructuring Revisited: Competition and Coordination in Electricity Distribution Systems

This paper addresses the implications of the emergence of distributed energy resources (DERs) for industry structure in the electric power […]

Sector Reforms and Institutional Corruption: Evidence from Electricity Industry in Sub-Saharan Africa

We analyse the impact of corruption and two key aspects of electricity sector reforms, such as the creation of independent […]

The Economics of Ride-Hailing: Driver Revenue, Expenses and Taxes (under revision)

UK Electricity Market Reform and the Energy Transition: Emerging Lessons

The UK was widely seen as one of the world’s leaders on electricity deregulation in the early 1990s. Though the […]

Subsidizing Fuel Efficient Cars: Evidence from China’s Automobile Industry

We examine the response of vehicle purchase behavior to China’s largest national subsidy program for fuel efficient vehicles during 2010 […]

The Use of Regression Statistics to Analyze Imperfect Pricing Policies

Corrective taxes can completely solve a variety of market failures, but actual policies are commonly forced to deviate from the […]

What’s Killing Nuclear Power in US Electricity Markets? Drivers of Wholesale Price Declines at Nuclear Generators in the PJM Interconnection

Electricity market prices across organized wholesale electricity markets in the United States have declined significantly in recent years, prompting several […]

Learning, Adaptation, and Climate Uncertainty: Evidence from Indian Agriculture

The profitability of many agricultural decisions depends on farmers’ abilities to predict the weather. Since climate change implies (possibly unknown) […]

Finding Itself in the Post-Paris World: Russia in the New Global Energy Landscape

The Russian budget relies heavily on exports of fossil fuels, which are the major source of greenhouse gas (GHG) emissions. […]

Linking Heterogeneous Climate Policies (Consistent with the Paris Agreement)

The Paris Agreement has achieved one of two key necessary conditions for ultimate success—a broad base of participation among the […]

Vintage-specific Driving Restrictions

Local air pollution problems have led authorities in many cities around the world to impose limits on car use, increasingly […]

The Light and the Heat: Productivity Co-benefits of Energy-saving Technology

Measurement of the full costs and benefits of energy-saving technologies is often difficult, confounding adoption decisions. We study consequences of […]

Cost Pass-Through to Higher Ethanol Blends at the Pump: Evidence from Minnesota Gas Station Data

We examine the pass-through of wholesale prices to retail prices in the market for E85, which contains 51%–83% ethanol, and […]

TSO/DSO Coordination in a Context of Distributed Energy Resource Penetration

With respect to electrical grids and power systems there is a trend towards a greater penetration and subsequent utilization of […]

Output-based Allocations in Pollution Markets With Uncertainty and Self-Selection

We study pollution permit markets in which a fraction of permits are allocated to firms based on their output. Output-based […]

Using Output-based Allocations to Manage Volatility and Leakage in Pollution Markets

Output-based allocations (OBAs) are typically used in emission trading systems (ETS) with a fixed cap to mitigate leakage in sectors […]

Attribute Substitution in Household Vehicle Portfolios

Household preferences for goods with a bundle of attributes may have complex substitution patterns when one attribute is changed. For […]

More Gas, Less Coal, and Less CO2? Unilateral CO2 Reduction Policy with More than One Carbon Energy Source

We examine an open economy’s strategy to reduce its carbon emissions by replacing its consumption of coal (very carbon intensive) […]

Black Carbon Problems in Transportation: Technological Solutions and Governmental Policy Solutions

The adverse effects of black carbon (BC) emissions from diverse sources are significant in human and economic terms. BC emissions […]

The Behavioral Effect of Pigovian Regulation: Evidence from a Field Experiment

Pigovian regulation provides monetary penalties/rewards to incentivize prosocial behavior, and may thereby trigger behavioral effects beyond a more standard response […]

Modeling Unit Commitment in Political Context: Case of China’s Partially Restructured Electricity Sector

Restructuring an electricity sector entails a complex realignment of political and economic institutions, which may both delay and distort the […]

Are Consumers Poorly-Informed about Fuel Economy? Evidence from Two Experiments

It has long been argued that people are poorly-informed about and inattentive to fuel economy when buying cars, and that […]

Tropical Forests, Tipping Points, and the Social Cost of Deforestation

Recent work has suggested that tropical forest and savanna represent alternative stable states, which are subject to drastic switches at […]

When Do States Disrupt Industries? Electric Cars in Germany and the United States

The literature on the developmental state suggests that state structure determines the ability of governments to drive technological change. This […]

A Green Bargain? The Impact of an Energy Saving Program on Productivity Growth in China’s Iron and Steel Industry

The impact of environmental regulation on firm productivity has been long been debated, however, mainly for western economies and with […]

Anticipation and Environmental Regulation

When agents expect a regulation to change the relative price of new equipment, they may shift purchases forward to avoid […]

Limits to Arbitrage in Electricity Markets: A Case Study of MISO

As in most commodities markets, deregulated electricity markets allow the participation of purely financial traders to enhance informational and productive […]

Wind Capacity Investments: Inefficient Drivers and Long-Term Impacts

A pure energy-only market has been shown, under certain conditions, to create the optimal incentives for market entry and exit. […]

Estimating The Future Supply of Shale Oil: A Bakken Case Study

We propose a new way to estimate the remaining volume of recoverable shale oil resources in the U.S. Our method […]

Are Fuel Economy Standards Regressive?

Despite widespread agreement that a carbon tax would be more efficient, many countries use fuel economy standards to reduce transportation-related […]

Lower Oil Prices and the U.S. Economy: Is This Time Different?

We explore the effect on U.S. real GDP growth of the sharp and sustained decline in the global price of […]

Socialism for Red States in the Electric Utility Industry

TVA and the other federal electric utilities were created under Democratic administrations, and their service territories were initially bluer than […]

Carbon Market Stabilisation Measures: Implications for Linking

The persistently low allowance prices in the EU emissions trading scheme (EU ETS)—oscillating between €5/tCO2 and €17/tCO2 since 2008/9—has reignited […]

Tight Oil Development Economics: Benchmarks, Breakeven Points, and Inelasticities

When comparing oil and gas projects – their relative attractiveness, robustness, and contribution to markets – various dollar per barrel […]

A Theory of NGO Activism

Now more than ever, activist NGOs oppose industrial projects/practices that have nevertheless been approved by public regulators. These NGOs are […]

Running Randomized Field Experiments for Energy Efficiency Programs: A Practitioner’s Guide

Researchers and professional evaluators are increasingly turning to randomized field experiments to evaluate energy efficiency programs and policies. This article […]

Multilateral Linking of Emissions Trading Systems

All things being equal, integration of emissions trading systems though linking increases their economic efficiency. With several greenhouse gas emissions […]

Energy Scenarios: The Value and Limits of Scenario Analysis

A need for a low-carbon world has added a new challenging dimension for the long-term energy scenarios development. In addition […]

Absolute vs. Intensity-based Caps for Carbon Emissions Target Setting: An Obstacle to Linking the EU ETS to a Chinese National ETS?

Linking the European Union Emissions Trading System (EU ETS) to the Chinese national ETS promises considerable economic and political benefits. […]

Electricity Services in a More Distributed Energy System

The integration of significant volumes of intermittent renewable generation and distributed energy resources in electric power systems is forcing a […]

OPEC vs US shale: Analyzing the Shift to a Market-share Strategy

In November 2014, OPEC announced a new strategy geared towards improving its market share. Oil-market analysts interpreted this as an […]

The Local Economic and Welfare Consequences of Hydraulic Fracturing

Exploiting geological variation within shale deposits and timing in the initiation of hydraulic fracturing, this paper finds that allowing fracing […]

Will We Ever Stop Using Fossil Fuels?

Scientists believe significant climate change is unavoidable without a drastic reduction in the emissions of greenhouse gases from the combustion […]

The Impact of Uncertainty on the Need and Design of Capacity Remuneration Mechanisms in Low-Carbon Power Systems

The case for or against capacity remuneration mechanisms (CRMs) is often made in a simple framework that takes the structure […]

The Value of Aggregators in Electricity Systems

Distributed energy resources (“DERs”) are being adopted throughout the world. These technologies, if properly integrated, have the potential to not […]

Lessons Learned from Three Decades of Experience with Cap-and-Trade

Thirty years ago, the notion of a government allocating tradable rights to emit pollution was controversial. Many environmental advocates felt […]

A Global Carbon Market?

This paper explores the prospects for a global carbon market as the centrepiece of any serious attempt to reach the […]

The Geoeconomics of Russian-EU Gas Trade: Drawing Lessons from the South Stream Pipeline Project

Energy trade has developed into one of the most contentious and divisive issues between Russia and EU in the post-Cold […]

Natural Gas Prices and Coal Displacement: Evidence from Electricity Markets

We examine the environmental impact of the post-2005 natural gas glut in the United States due to the shale gas […]

How do Carbon Emissions Respond to Business-Cycle Shocks?

Carbon dioxide emissions are highly correlated with cyclical fluctuations in the U.S. economy; they increase during booms and fall during […]

The Pass-Through of RIN Prices to Wholesale and Retail Fuels under the Renewable Fuel Standard

The U.S. Renewable Fuel Standard (RFS) requires blending increasing quantities of biofuels into the U.S. surface vehicle fuel supply. In […]

Progress and Problems in Reforming the Swaps Marketplace

US derivative markets, including commodity derivatives used in industries like energy, are undergoing dramatic reform following the financial crisis. This […]

The Simple Economics of Asymmetric Cost Pass-Through

In response to cost changes, prices often rise more strongly or quickly than they fall. This phenomenon has attracted attention […]

Vehicle Miles (Not) Traveled: Why Fuel Economy Requirements Don’t Increase Household Driving

A major concern with addressing the negative externalities of gasoline consumption by regulating fuel economy, rather than increasing fuel taxes, […]

Competition and Externalities in Green Technology Adoption

In this paper, we study the effects of competition among multiple suppliers who sell green technology products, such as electric […]

Consumer Subsidies with a Strategic Supplier: Commitment vs. Flexibility

Governments use consumer incentives to promote green technologies (e.g., solar panels and electric vehicles). Our goal in this paper is […]

The Use and Misuse of Models for Climate Policy

In recent articles, I have argued that integrated assessment models (IAMs) have flaws that make them close to useless as […]

Limit Pricing and the (In)Effectiveness of the Carbon Tax

The conventional analysis of policy-induced changes in resource extraction is inconsistent with the actual way OPEC is exerting its market […]

Cash for Corollas: When Stimulus Reduces Spending

The 2009 Cash for Clunkers program aimed to stimulate consumer spending in the new automobile industry, which was experiencing disproportionate […]

Soft Cooperation in the Shadow of Distributional Conflict? A Model-Based Assessment of the Two-Level Game between International Climate Change Negotiations and Domestic Politics

In climate negotiations, negotiators frequently reject soft forms of cooperation that require no hard commitments and at best simple coordination. […]

Financial Arbitrage and Efficient Dispatch in Wholesale Electricity Markets

Virtual bidding is a type of transaction introduced into wholesale electricity markets to improve competition and pricing. This paper analyzes […]

The Performance of U.S. Wind and Solar Generators: An Update

Using data on hourly outputs and spot prices for a sample 25 wind and nine solar generating plants covering all […]

Strategic Policy Choice in State-Level Regulation: The EPA’s Clean Power Plan

Flexibility in environmental regulations can lead to reduced costs if it allows additional abatement from lower cost sources or if […]

A Framework for Redesigning Distribution Network Use of System Charges Under High Penetration of Distributed Energy Resources: New Principles for New Problems

The growing potential for widespread integration of distributed energy resources (DER) presents the electric power sector with significant changes to […]

Why is Spot Carbon so Cheap and Future Carbon so Dear? The Term Structure of Carbon Prices

This study examines carbon spot and futures price relationships and the dynamics of the carbon term structure in the European […]

The Remuneration Challenge: New Solutions for the Regulation of Electricity Distribution Utilities Under High Penetrations of Distributed Energy Resources and Smart Grid Technologies

Ongoing changes in the delivery of electricity services and the use and management of electricity distribution systems—including the proliferation of […]

Modeling Intermittent Renewable Energy: Can We Trust Top-Down Equilibrium Approaches?

Economy-wide top-down equilibrium (TD) models have traditionally proved to be valuable tools for assessing energy and climate policies. New modeling […]

Technological Change, Vehicle Characteristics, and the Opportunity Costs of Fuel Economy Standards

Many countries are tightening passenger vehicle fuel economy standards. In assessing the welfare effects of standards, the literature has not […]

Melting-pots and Salad Bowls: The Current Debate on Electricity Market Design for RES Integration

This paper discusses a series of issues regarding the economic integration of intermittent renewables into European electricity markets. This debate […]

Investment Model for Renewable Electricity Systems (IMRES): an Electricity Generation Capacity Expansion Formulation with Unit Commitment Constraints

This paper describes the formulation of IMRES: an electricity generation capacity expansion model with unit commitment constraints in which decisions […]

The Performance of U.S. Wind and Solar Generating Plants

Government subsidies have driven rapid growth in U.S. wind and solar generation. Using data on hourly outputs and prices for […]

Climate Change Policy: What do the Models Tell Us?

Very little. A plethora of integrated assessment models (IAMs) have been constructed and used to estimate the social cost of […]

The Simple Economics of Commodity Price Speculation

The price of crude oil in the U.S. had never exceeded $40 per barrel until mid-2004. By 2006 it reached […]

The Welfare Impact of Indirect Pigouvian Taxation: Evidence from Transportation

A basic tenet of economics posits that when consumers or firms don’t face the true social cost of their actions, […]

Adapting to Climate Change: The Remarkable Decline in the U.S. Temperature-Mortality Relationship over the 20th Century

Adaptation is the only strategy that is guaranteed to be part of the world’s climate strategy. Using the most comprehensive […]

The Origin of US Transportation Policy: Was There Ever Support for Gasoline Taxes?

From 1864 to 1972, the real price of oil fell by, on average, over one percent per year. This trend […]

Did “Cash for Clunkers” Deliver? The Effects of the Car Allowance Rebate System

In this paper we analyze whether the 2009 “Cash for Clunkers” program was indeed, as U.S. Transportation Secretary Ray LaHood […]

The Effects of Environmental Regulation on the Competitiveness of U.S. Manufacturing

The economic costs of environmental regulations have been widely debated since the U.S. began to restrict pollution emissions more than […]

Risk and Return in Environmental Economics

I examine the risk/return tradeoff for environmental investments, and its implications for policy choice. Consider a policy to reduce carbon […]

The Climate Policy Dilemma

Climate policy poses a dilemma for environmental economists. The economic argument for stringent GHG abatement is far from clear. There […]

Up in Smoke: The Influence of Household Behavior on the Long-Run Impact of Improved Cooking Stoves

It is conventional wisdom that it is possible to reduce exposure to indoor air pollution, improve health outcomes, and decrease […]

Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program and Ozone Reductions

Willingness to pay for air quality is a function of health and the costly defensive investments that contribute to health, […]

Ethanol Production and Gasoline Prices: A Spurious Correlation

Ethanol made from corn comprises 10% of US gasoline, up from 3% in 2003. This dramatic increase was spurred by […]

Margins, Liquidity and the Cost of Hedging

Recent financial reforms, such as the Dodd-Frank Act in the U.S. and the European Market Infrastructure Regulation, encourage greater use […]

Cleaning the Bathwater with the Baby: The Health Co-Benefits of Carbon Pricing in Transportation

Efforts to reduce greenhouse gas emissions in the US have relied on Corporate Average Fuel Economy (CAFE) Standards and Renewable […]

Russia’s Natural Gas Export Potential up to 2050

Recent increases in natural gas reserve estimates and advances in shale gas technology make natural gas a fuel with good […]

Regulatory Design for RES-E Support Mechanisms: Learning Curves, Market Structure, and Burden-Sharing

Drawing from relevant experiences in power systems around the world, this paper offers a critical review of existing policy support […]

Effects of the Uncertainty about Global Economic Recovery on Energy Transition and CO2 Price

This paper examines the impact that uncertainty over economic growth may have on global energy transition and CO2 prices. We […]

Public Attitudes Toward America’s Energy Options – Report of the 2007 MIT Energy Survey

Stephen Ansolabehere, March 2007 The prospects of global warming and potential shortages of oil have brought energy back to the […]

An Institutional Frame to Compare Alternative Market Designs in EU Electricity Balancing

Jean Michel Glachant and Marcelo Saguan, January 2007 The so-called “electricity wholesale market” is, in fact, a sequence of several […]

The Future of Nuclear Power in the United States: Economic and Regulatory Challenges

Paul L. Joskow, December 2006 This paper examines the economic and regulatory challenges that must be faced by potential investors […]

Infrastructure Investments and Resource Adequacy in the Restructured US Natural Gas Market – Is Supply Security at Risk?

Christian von Hirschhausen, December 2006 The objective of this paper is to analyze the development of US natural gas infrastructure […]

Long-Term contracts and Asset Specificity Revisited – An Empirical Analysis of Producer-Importer Relations in the Natural Gas Industry

Anne Neumann and Christian von Hirschhausen, May 2006 In this paper, we analyze structural changes in long-term contracts in the […]

Short & Long Run Transmission Incentives for Generation Location

Ralph Turvey, March 2006 This paper is about one aspect of Britain’s electricity trading system, its advantages and its weaknesses […]

The Effects of Hazardous Waste Taxes on Generation and Disposal of Chlorinated Solvent Waste

Hilary Sigman, October 1992 In 1989, 30 states levied taxes on e generation or management of hazardous waste. These taxes […]

The Effects of Hazardous Waste Taxes on Generation and Disposal of Chlorinated Solvent Waste

Hilary Sigman, October 1992 In 1989, 30 states levied taxes on e generation or management of hazardous waste. These taxes […]

Energy and Environmental Policy and Electric Utilities’ Choice under Uncertain Global Warming

Masaki Takahashi, August 1992 The paper reviews and discusses uncertainty about global warming science, impact on society. It also discusses […]

Energy and Environmental Policy and Electric Utilities’ Choice under Uncertain Global Warming

Masaki Takahashi, August 1992 The paper reviews and discusses uncertainty about global warming science, impact on society. It also discusses […]

Organizational Learning at Nuclear Power Plants

John S. Carroll, Constance Perin, and Alfred A. Marcus, December 1991 The Nuclear Power Plant Advisory Panel on Organizational Learning […]

The Potential Role of New Technology for Enhanced Safety and Performance of Nuclear Power Plants Through Improved Service Maintenance

Ted Glen Achorn, May 1991 Refinements in the safety and performance of nuclear power plants must be made to maintain […]

The Organization and Management of Nuclear Power Plants

John S. Carroll and Peter B. Cebon, February 1990 Nuclear power plants are a controversial technology. The future of the […]

Western Europe Natural Gas Trade

During the past two years, a group of researchers at the MIT Center for Energy Policy Research has been conducting […]

Western Europe Natural Gas Trade

East Asia/Pacific Natural Gas Trade

This paper will examine how a set of past policies and practices has produced a pattern of LNG use in […]

Canadian-U.S. Natural Gas Trade

The MIT project on international gas trade is examining the forces affecting natural gas trade in the three major markets: […]

Canadian-U.S. Natural Gas Trade

The MIT project on international gas trade is examining the forces affecting natural gas trade in the three major markets: […]

Canadian-U.S. Natural Gas Trade

The MIT project on international gas trade is examining the forces affecting natural gas trade in the three major markets: […]

Canadian-U.S. Natural Gas Trade