Doctoral Dissertations

Date of Award

5-2024

Degree Type

Dissertation

Degree Name

Doctor of Philosophy

Major

Economics

Major Professor

James Scott Holladay

Committee Members

Georg Schaur, Matt Van Essen, Fangxing Li

Abstract

This dissertation consists of three papers, one each in energy economics, the environment and trade, and public economics. The first chapter generalizes the classical concept of the Lindahl allocation, a normative standard by which a theoretical provision of public goods is judged. The generalization, called a Generalized Lindahl Equilibrium (GLE), requires a personalized tax schedule to be assigned to each consumer, rather than a single personalized tax. This allows for non-linear taxation, redistribution of consumer surplus, and a more `just' provision of public goods. The second chapter studies how trade policy and environmental policy affect the timing of adoption of air pollution abatement technology, in theory. There is an environmental policy that makes adoption of the technology profit increasing. The technology is assumed to have an adoption cost that is exogenously decreasing over time. Firms are ex-ante homogeneous, but adoption does not occur all at once because of stock effects: as more firms adopt, the benefit of adopting decreases. Thus, adoption takes place over a period of time. I prove that both stricter environmental policy in a closed economy and more liberal trade policy in an open economy lead to adoption starting and ending sooner. The final chapter studies how achieving reliability on the electrical grid affects prices. The N-1 reliability standard I study is enforced by changing the market-derived allocation of generation until supply can meet demand without violating any transmission constraints in the event a single generator goes offline. The changes to generation in this case are known as out-of-market corrections (OMCs). OMCs tend to increase costs, because they reallocate generation away from the cost minimizing market solution, but their effect on price has not been estimated before. Using California electrical grid data, I provide the first estimate of the effect of OMCs on electricity prices. I find that they decrease the average price of electricity on an electrical grid. This suggests that OMCs distort prices by misrepresenting the costs of their use.

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