Research Interests:
Industrial Organization, Environmental Economics, Applied Econometrics, Energy
Current Research:
"Dynamic Response to Environmental Regulation in Electricity Markets"
Abstract
Climate change, driven by rising carbon dioxide (CO2) levels, has become one of the most pressing economic and political issues. Governments around the world are implementing environmental regulations that tax or price carbon dioxide emissions or significantly increase renewable energy production. The response of electricity producers, the leading emitters of pollutants, is uncertain. Using a dynamic, structural model, I recover the cost parameters which govern a firm's decisions to simulate the supply of electricity, consumer surplus and firm profits under counterfactual environmental policies. I simulate the supply of electricity under two different scenarios currently under consideration: a carbon tax and an increase in renewable energy due to subsidies. Preliminary results show that total emissions from the industry do not change significantly when faced with carbon tax rates at the levels currently under consideration by legislators. A very large carbon tax of ten times that of expected price levels lowers emissions by only 14% in the short run.
"Measuring the Environmental Benefits of Wind Generated Electricity"
Abstract
Production subsidies for renewable energy have been a popular program due to their perceived environmental benefits. However, little empirical research has been conducted which would quantify such benefits. Wind energy in particular has taken advantage of federal subsidies, but what has been the environmental impact? Taking investment in wind capacity as given, I am able to identify the short run substitution patterns between wind power and conventional power for large electricity grid in Texas. I exploit the randomness of wind to identify plant level substitution of wind generated electricity for conventionally generated electricity. I then quantify the avoided emissions and associated costs using plant level emissions information, market clearing prices for pollution permits, and estimates of the social costs of pollution. The end result is the value of avoided emissions due to government subsidies.
Publications:
"Bundling, product choice, and efficiency: Should cable television networks be offered a la carte?" with Gregory S. Crawford. Published in Information Economics and Policy, Volume 19, Issues 3-4. Economics of the Media, October 2007, Pgs. 379-404
Abstract
We conduct a numerical analysis of bundling's impact on a monopolist's pricing and product choices and assess the implications for consumer welfare in cable television markets. Existing theory is ambiguous: for a given set of products, bundling likely transfers surplus from consumers to firms but also encourages products to be offered that might not be under a la carte pricing. Simulation of "Full A La Carte" for an economic environment calibrated to an average cable television system suggests that consumers would likely benefit from a la carte sales. If all networks continued to be offered, the average household's surplus is predicted to increase by $6.80 (65.6%) under a la carte sales (despite a total bundle price that almost doubles) and reduced network profits would have to be such that 41 of 50 offered cable networks have to exit the market to make her indifferent. Simulation of a "Theme Tier" scenario provides intermediate benefits. The incremental marginal costs to cable systems of a la carte sales and its impact in the advertising market and on competition are important factors in determining consumer benefits.
Working Papers:
“Can Carbon Taxes Improve Competition?” with Greg Lewis and Mar Reguant
"Does Large Scale Military Spending Stimulate Economy? The Implications of WWII Spending for Local Economic Activity." With Price Fishback
NBER Working Paper # 12801. Also, University of Arizona Working Paper # 06-15
Abstract
We examine whether local economies that were the centers of federal spending on military mobilization experienced more rapid growth in consumer economic activity than other areas. We have combined information from a wide variety of sources into a data set that allows us to estimate a reduced-form relationship between retail sales per capita growth (1939-1948, 1939-1954, 1939-1958) and federal war spending per capita from 1940 through 1945. The results show that the World War II spending had virtually no effect on the growth rates in consumption that we examined. This contrasts with Fishback, M Horrace, and Kantor's (2005) findings of about half a dollar increase in retail sales associated with a dollar of New Deal public works and relief spending. Several factors contributed to this relative lack of impact. World War II spending often required a conversion of plants designed for civilian good production into military factories and back again over the 9 year period. Substantially higher federal tax rates that were paid by the majority of households imposed much stronger fiscal drags on the benefits of the spending. Finally, less of the military spending was earmarked for wages and use of locally produced inputs, which reduced the direct stimulus to the local economy.
"Clustering Behavior of Cable TV Firms: Implications on Price and Quality" (Awarded the Edward E. Zajac Prize by the University or Arizona Department of Economics)
Abstract
Over the past decade, firms owning cable television systems have engaged in a regional strategy of geographic consolidation. Firms have concentrated their operations by acquiring cable systems in regions
where they already have a significant presence, while giving up other holdings scattered across the country. This geographic agglomeration in the cable industry is called clustering. Clustering is a strategic behavior with potentially significant impacts on the pricing, quality, and competition in media industries, yet it has received very little scholarly attention. This paper uses a nationwide data set of cable providers over a six year period to analyze the implications of clustering on competition in the cable market. In particular, I analyze the impact of clustering on the price and quality of services provided by cable companies.
“Measuring the Price Impact of Retailers: Locations and Brands"
With Jedidiah Brewer and Tim Davies
Abstract
In this paper we examine the combined effects of the locations and the brands of retail gasoline outlets in Tucson, Arizona on market prices. We apply an innovative approach to model the impact of competing gas stations that avoids limiting analysis to predetermined nearby locations. We show that: (1) increased brand diversity is associated with higher prices; and, (2) gas stations affiliated with mass-merchandisers and grocery stores reduce market prices by a larger amount and over a greater distance than other types of gas stations. We demonstrate that our conclusions are not sensitive to the choice of distance metric.