Catherine Wolfram

Strategic Bidding in a Multiunit Auction: An Empirical Analysis of Bids to Supply Electricity in England and Wales

I consider bidding behavior in the daily electricity auction in England and Wales. Theoretical work on uniform-price multiunit procurement auctions suggests that bidders offering more than one unit have an incentive to increase their bids at high quantities. If a bid sets a high equilibrium price, it applies to all inframarginal units. I find evidence of strategic bid increases in the electricity auctions. First, plants that are likely to be used after other plants are already operating bid more. Second, the larger supplier submits higher bids for similar plants. Last, bids for a given plant are slightly higher on days when more of the capacity that is typically inframarginal to that plant is available.

Does Competition Reduce Costs? Assessing the Impact of Regulatory Restructuring on U.S. Electric Generation Efficiency

While neoclassical models assume static cost-minimization by firms, agency models suggest that firms may not minimize costs in less-competitive or regulated environments. We test this using a transition from cost-of-service regulation to market-oriented environments for many U.S. electric generating plants. Our estimates of input demand suggest that publicly-owned plants, whose owners were largely insulated from these reforms, experienced the smallest efficiency gains, while investor-owned plants in states that restructured their wholesale electricity markets improved the most. The results suggest modest medium-term efficiency benefits from replacing regulated monopoly with a market-based industry structure.

Decomposing the Sources of Incumbency Advantage in the U. S. House

This paper develops a model of incumbency advantage that takes into account candidate quality, and then estimates the parameters of that model using panel data on the U.S. House from 1948 to 1990. Our approach allows us to go beyond the previous literature, which has focused primarily on measurement of incumbency advantage, to a decomposition of its sources. The primary explanation for the rising incumbency advantage appears to be the increasing ability of incumbents to deter high-quality challengers. In contrast, direct officeholder benefits (e.g., franking privileges, media exposure, fund-raising advantages, etc.) have been relatively stable over time and now account for less than half of the overall incumbency advantage.

Regulating Executive Pay: Using the Tax Code to Influence Chief Executive Officer Compensation

This study explores corporate responses to 1993 legislation that capped the corporate tax deductibility of top management compensation not qualified as “performance‐based.” Our analysis suggests that the cap may have created a focal point for salary compensation but had little effect on total compensation levels or growth rates at firms likely to be affected by the limit. There is little evidence that the policy significantly increased the performance sensitivity of chief executive officer (CEO) pay at affected firms. We conclude that corporate pay decisions have been relatively insulated from this policy intervention.

Work Environment and \Opt-Out" Rates at Motherhood Across High-Education Career Paths ⁄

Observing a sample of Harvard alumnae in their late thirties, the authors study the relationship between workplace flexibility and the labor force participation of mothers. They first document a large variation in labor force participation rates across higher education fields. Mindful of the possibility of systematic patterns in the types of women who complete various graduate degrees, they use the rich information available for the sample, supplemented by the longitudinal nature of a subset of these data, to assess the extent to which these labor supply patterns may reflect variation in the difficulty of combining work with family. Although ruling out systematic sorting entirely is not possible, their evidence suggests that inflexible work environments “push” women out of the labor force at motherhood.

Pharmaceutical Prices and Political Activity

Drug prices have been a conspicuous political issue in much of recent history, but no more so than during health care reform debates in 1993 and 1994. This paper investigates possible effects of political activity on pharmaceutical prices, with a particular focus on the health care reform period. It evaluates the extent to which pharmaceutical companies slowed the rates at which they increased prices in an attempt to preempt government intervention. To do so, we characterize companies based on their vulnerability to future price regulation. We then consider patterns in price movements across companies. The results suggest that companies whose drugs had longer patent lives and who had recently increased contributions to their corporate Political Action Committees (PACs) slowed price increases during 1992 and 1994 more than their competitors. It is difficult to distinguish pricing differences across companies in 1993, perhaps because most companies had pledged to keep price increases below the rate of inflation.

An economic perspective on the EPA's Clean Power Plan

Cross-state coordination key to cost-effective CO2 reductions In June, the Obama Administration unveiled its proposal for a Clean Power Plan, which it estimates would reduce carbon dioxide (CO2) emissions from existing U.S. power plants 30% below 2005 levels by 2030 (see the chart). Power plant emissions have declined substantially since 2005, so the plan is seeking reductions of about 18% from current levels. Electricity generation accounts for about 40% of U.S. CO2 emissions.

Experience: Android Resists Liberation from Its Primary Use Case

Network connectivity is often one of the most challenging aspects of deploying sensors. In many countries, cellular networks provide the most reliable, highest bandwidth, and greatest coverage option for Internet access. While this makes smartphones a seemingly ideal platform to serve as a gateway between sensors and the cloud, we find that a device designed for multi-tenant operation and frequent human interaction becomes unreliable when tasked to continuously run a single application with no human interaction, a seemingly counter-intuitive result. Further, we find that economy phones cannot physically withstand continuous operation, resulting in a surprisingly high rate of permanent device failures in the field. If these observations hold more broadly, they would make mobile phones poorly suited to a range of sensing applications for which they have been rumored to hold great promise.

Deconstructing Biomass [part of The frontiers of energy]

Great strides have been made over the past century in our ability to harness energy sources, leading to profound transformations — both good and bad — in society. Looking at the energy system of today, it is clear that meeting the energy needs of the world now and in the years to come requires the concerted efforts of many different actors across a range of technologies and approaches. In this Feature, ten leading experts in energy research share their vision of what challenges their respective fields need to address in the coming decades. The issues being faced are diverse and multifaceted, from the search for better materials for fuels, to the design of energy policy and markets for the developing world. However, a common theme emerges: changes to adapt and improve our energy system are greatly needed. As a result, by improving our mutual understanding of the issues faced by each area of energy research, these changes can happen more smoothly, efficiently and rapidly.