Jonathan Falk

Market Power and Demand Responsiveness: Letting Customers Protect Themselves

Abstract To solve the real source of market failure—the demand side of the market not being able to respond to price—a demand-response mechanism can provide customers a way to react to high prices without interfering with the normal supply-side corrective market process, such as investment in additional capacity.

Determining Market Power in Deregulated Generation Markets by Measuring Price-Cost Margins

Abstract Supply function equilibrium models are potentially useful in judging the likely divergence of price from cost in deregulated generation markets. However, a model that attempts to predict the joint behavior of a number of sophisticated actors must be at least reasonably complex as well.

Complying with New Rules For Controlling Nitrogen Oxides Emissions

Abstract Tougher rules will require retrofitting NO x control equipment at existing plants while building more combined cycle plants and mothballing existing coal plants, a new analysis indicates.

Substituting Outrage for Thought: The Enron "Smoking Gun" Memos

Abstract Far from distorting the market, the majority of Enron’s strategies actually corrected potential distortions in complicated interrelated markets. To the extent that some of these strategies exploited market flaws to bring some of these markets out of alignment, there were obvious corrections available that policymakers should focus on rather than the futile, or at least unproductive, search for scapegoats.

Retroactive Retrograde Retreat: Keeping FERC in the Generation Pricing Business Forever

Abstract How much market power is too much market power? Frank Wolak’s answer is to say that market power is excessive when it results in prices which are not “just and reasonable,” where just and reasonable means whatever FERC thinks it means. But this is nonsense. If FERC knew what a just and reasonable price was, it could have simply ordered it and there would have been no particular reason to deregulate.

What Have We Learned from Asset Sales

Abstract The unfortunate answer, so far, is not much. Regression analyses of 33 non-nuclear utility sales provided very little guidance for making a sound estimate for units outside the sample. With sales of generating units occurring at a rapid pace, however, prospects may improve in the future.