Center for Energy and Environmental Policy Research

Rail costs and capital adjustments in a quasi regulated environment Friedlaender, Ann Fetter This paper reports on results obtained from the estimation of a rail cost function using a pooled-time series, cross section of Class I railroads for the period 1974-1986. An analysis is performed of short-run and long-run returns to scale, the extent of capital disequilibrium, and adjustments to way and …

Tax effects upon oil field development in Venezuela Manzano, Osmel Important reforms have been made to the oil sector tax code in Venezuela. Given its diversity of oil resources, there was a concern that some resources were not being exploited because of the structure of the tax code. This paper uses traditional theoretical models to review these reforms. Then, a panel of 821 Venezuelan oil field…

Multipollutant markets Montero, Juan-Pablo I study the optimal design of marketable permit systems to regulate various pollutants (e.g. air pollution in urban areas) when the regulator lives in a real world of imperfect information and incomplete enforcement. I show that the regulator should have pollution markets integrated through optimal exchange rates when the marginal abatement cost curves i…

Designing a US Market for CO2 Ellerman, A. Denny; Parsons, John E. In this paper we focus on one component of the cap-and-trade system: the markets that arise for trading allowances after they have been allocated or auctioned. The efficient functioning of the market is key to the success of cap-and-trade as a system. We review the performance of the EU CO2 market and the US SO2 market and examine…

A residential energy demand system for Spain Labandeira Villot, Xavier; Labeaga, José María; Rodriguez, Miguel A. Sharp price fluctuations and increasing environmental and distributional concerns, among other issues, have led to a renewed academic interest in energy demand. In this paper we estimate, for the first time in Spain, an energy demand system with household microdata. In doing so, we ta…

Market Power in Pollution Permit Markets Montero, Juan Pablo As with other commodity markets, markets for trading pollution permits have not been immune to market power concerns. In this paper, I survey the existing literature on market power in permit trading but also contribute with some new results and ideas. I start the survey with Hahn’s (1984) dominant-firm (static) model that I then extend…

Trading quasi-emission permits Montero, Juan-Pablo I study the design of environmental policies for a regulator that has incomplete information on firms' emissions and costs of production and abatement (e.g., air pollution in cities with numerous small polluting sources). Because of incomplete information on emissions, there is no policy that can implement the first-best. Since the regulator can …

Regulating carbon dioxide capture and storage De Figueiredo, Mark A. This essay examines several legal, regulatory and organizational issues that need to be addressed to create an effective regulatory regime for carbon dioxide capture and storage ("CCS"). Legal, regulatory, and organizational issues will need to be resolved for the industrial organization of CO2 transportation and storage, storag…

Crude oil supply curves Adelman, Morris Albert Short-run cost curves shift over time as depletion counters increasing knowledge. Under competition, a rightward (leftward) shift indicates lower (higher) cost and greater (lesser) productivity. A simple coefficient captures the slope, and its changes. USA crude oil productivity rose for many years, declined after 1972. In natural gas it can only be …

Quasi-experimental and experimental approaches to environmental economics Greenstone, Michael; Gayer, Ted This paper argues that an increased application of quasi-experimental and experimental techniques will improve understanding about core environmental economics questions. This argument is supported by a review of the limitations of associational evidence in assessing causal hypotheses. The pa…

Rail costs and capital adjustments in a quasi-regulated environment Friedlaender, Ann Fetter This paper reports on results obtained from estimation of a rail cost function using a pooled time-series cross section of Class I U.S. railroads for the period 1973-1986. Based on the results of this cost function, an analysis is performed of short-run and long-run returns to scale, and adjustments in wa…

Implementing environmental taxes on intemediate goods in open economies Poterba, James M.; Rotemberg, Julio Many proposed and actual environmental taxes are taxes on intermediate goods. These goods, such as fossil fuels, are typically tradable, and they are also used in the production of many tradable final goods. How should imports of intermediate and final goods be taxed if the government does …

Micro economics for demand-side management Kibune, Hisao This paper aims to interpret Demand-Side Management (DSM) activity and to point out its problems, adopting microeconomics as an analytical tool. Two major findings follow. first, the cost-benefit analysis currently in use has the following problems: (i) inconsistency in cost comparison between utility costs on the supply-side and utility co…

OPEC at high noon 1974-1981 Adelman, Morris Albert After 1973, oil consumption stagnated worldwide. Non-OPEC output increased, mostly in Alaska, Mexico, and the North Sea, but not because of the price rise. The cartel nations had to assume the whole burden of cutting back output to maintain price. The demand for OPEC oil, the difference between total demand and non-OPEC supply, declined according…

Cap-and-Trade Properties under Different Scheme Designs Taschini, Luca; Grüll, Georg This paper examines the key design mechanisms of existing and proposed cap-and-trade markets. First, it is shown that the hybrid systems under investigation (safety-valve with offsets, price floor using a subsidy, price collar, allowance reserve, and options offered by the regulator) can be decomposed into a comb…