Job Market Paper
Abstract: Economists have widely endorsed pricing CO2 emissions to internalize climate change-related externalities. Doing so would significantly affect coal, which is the most carbon-intensive major energy source. However, U.S. coal markets exhibit an additional distortion, as the railroads that transport coal to power plants can exert market power. This upstream distortion can mute the price signal of a corrective tax, due to changes in markups or incomplete tax pass-through. In this paper, I provide the first empirical estimates of how coal-by-rail markups respond to changes in coal demand. I find that rail carriers reduce coal markups when downstream power plant demand changes, due to a decrease in the price of a natural gas (a competing fuel). I estimate markup changes that vary substantially across coal plants, resulting from a combination of heterogeneous transportation market structure and plant-specific demand shocks. Since low natural gas prices and a CO2 emissions tax similarly disadvantage coal, observed decreases in coal markups imply that pass-through of a federal carbon tax to coal power plants may be heterogeneous and incomplete. This could substantially erode the environmental benefits of a price-based climate policy. My results suggest that decreases in coal markups have increased recent climate damages by $2.4 billion, compared to a counterfactual where markups do not change.
Selected Working Papers
- "Panel Data and Experimental Design." [online appendix]
(with Fiona Burlig and Matt Woerman; under revision)
Stata package: enter - ssc describe pcpanel - into Stata console
- "Out of the Darkness and Into the Light? Development Effects of Rural Electrification." [online appendix]
(with Fiona Burlig; revise and resubmit at Journal of Political Economy)
Policy brief: ARE Update
Press: IEEE Spectrum
- "Optimal Siting, Sizing, and Enforcement of Marine Protected Areas in Lower Income Countries"
(with Jo Albers, Elizabeth Robinson, and Róger Madrigal) [draft available upon request]
- "Environmental and Technology Policy Options in the Electricity Sector: Are We Deploying Too Many?"
Journal of the Association of Environmental and Resource Economists 4(4): 959–984. 2017.
(with Carolyn Fischer and Richard Newell) [working paper version]
- "Combining Policies for Renewable Energy: Is the Whole Less Than the Sum of Its Parts?"
International Review of Environmental and Resource Economics 4(1): 51–92. 2010.
(with Carolyn Fischer)
Selected Works in Progress
- "Determinants of the Costs of Electricity Supply in India" (with Fiona Burlig and Akshaya Jha)
- "Energy Efficiency in Agriculture: Electricity Use, Water Demand, and Farm Profits" (with Fiona Burlig and Matt Woerman)