We analyze optimal policy when consumers of energy-using durables undervalue energy costs relative to their private optima. First, there is an Internality Dividend from Externality Taxes: aside from reducing externalities, they also offset distortions from underinvestment in energy efficiency....

Many countries use substantial public funds to subsidize reductions in negative externalities. However, such subsidies create asymmetric incentives because increases in externalities remain unpriced. This paper examines implications of such asymmetric subsidy incentives by using a regression...

Nonlinear pricing and taxation complicate economic decisions by creating multiple marginal prices for the same good. This paper provides a framework to uncover consumers' perceived price of nonlinear price schedules. I exploit price variation at spatial discontinuities in electricity service...

This review paper provides an overview of the application of behavioral public economics to energy efficiency. I document policymakers' arguments for "paternalistic" energy efficiency policies, formalize with a simple model of misoptimizing consumers, review and critique empirical evidence, and...

Reliable estimates of the value of electricity transmission are critical if these heavily-regulated investments are to be made cost-effectively. In this paper, we exploit the abrupt closure of the San Onofre Nuclear Generating Station (SONGS) in February 2012. During the previous decade, SONGS...

Most US consumers are charged a near-constant retail price for electricity, despite substantial hourly variation in the wholesale market price. The Smart Grid is a set of emerging technologies that, among other effects, will facilitate "real-time pricing" for electricity and increase price...

A direct consequence of imposing a ceiling on the price of a good for which secondary markets do not exist, is that, when there is excess demand, the good will not be allocated to the buyers who value it the most. The resulting allocative cost has been discussed in the literature as a...

This paper examines the implications of regulatory change for the input mix and technology choices of regulated industries. We present a simple neoclassical framework that emphasizes the change in relative factor prices associated with the regulatory change from full cost to partial cost...

Firms and governments often use moral suasion and economic incentives to influence intrinsic and extrinsic motivations for various economic activities. To investigate the persistence of such interventions, we randomly assigned households to moral suasion and dynamic pricing that stimulate energy...

While public discussion of HR 2454 (the “Waxman Markey” bill) has focused on the cap-andtrade program that would be established for carbon emissions, the bill also includes provisions that would tighten energy efficiency standards for consumer appliances. Supporters argue that appliance...