Energy and Environmental Markets, Industrial Organization, and Regulation
This paper discusses contributions that industrial organization economists have made to our understanding of energy markets and environmental regulation. We emphasize the substantive contributions of recent papers while also highlighting how this literature has adopted and sometimes augmented theoretical and empirical tools from industrial organization. Many of the topics examined by this literature—especially auctions, investment, productivity and innovation, and regulation—also apply to a variety of settings beyond energy and the environment. We also indicate areas where future research is likely to be fruitful, with an emphasis on how industrial organization economists can help inform energy and environmental policies.
This manuscript is an invited chapter for the forthcoming volume of the 4th Handbook of Industrial Organization by Elsevier. We thank the editors and four anonymous referees for helpful suggestions while preparing this chapter. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.