This book presents a new approach to the valuation of capital asset investments and investment decision-making. Starting from simple premises and working logically through three basic elements (capital, income, and cash flow), it guides readers on an interdisciplinary journey through the...

In this paper, we present a straightforward economic model that explains the incentives to manipulate nodal energy prices in a “Day 2” RTO market. The model distinguishes between legitimate market participation that increases overall market efficiency and manipulative behavior that distorts...

In 2009, the promise of a comprehensive federal cap and trade bill to address climate change fell apart. At least in part, this was due to the fears that exotic 'carbon' financial instruments might cause more financial crises. As California launches it economy wide carbon trading system, and...

In this paper, we describe the development and current status of anti-manipulation rules as they apply to wholesale electricity and natural gas markets in the United States and the European Union, including the institutions that are responsible for overseeing these rules. We then compare and...

This paper, written for a Conference on Cost-Benefit Analysis (CBA) of Financial Regulation held at the University of Chicago in October 2013, analyzes the institutional framework that has historically governed the CBA of financial regulation. Although U.S. financial regulators are often...

Federal appeals courts have vacated several Securities and Exchange Commission (SEC) rules due to inadequate economic analysis. The SEC, pledging to do better, published staff economic analysis guidance in March 2012 that covers many of the same topics executive branch agencies address in...

Cost-benefit analysis of financial regulation (CBA/FR) has become a flashpoint in contemporary legal and political debates, partly due to the Dodd-Frank Act. Yet debates over CBA/FR exhibit terminological confusion, and CBA/FR advocacy has outrun the possible, given data limitations and current...

Many regulators have concluded that cost-benefit analysis is the best available method for capturing the welfare effects of regulations. It is therefore understandable that in recent years, some people have been interested in requiring financial regulators to engage in careful cost-benefit...

A series of recent judicial setbacks has rapidly elevated the role of economic analysis and economists at the SEC. I discuss key organizational responses following the 2011 D.C. Circuit decision in Business Roundtable v. SEC. Significantly greater resources were allocated to the SEC's Division...

Following a number of high-profile judicial setbacks, the U.S. Securities and Exchange Commission (SEC) has devoted considerable resources towards enhancing its economic analyses in support of rulemaking activities. An ensuing discussion has emerged among academics, policymakers, and regulators...