L. Lynne Kiesling

Explaining the rise in antebellum pauperism, 1850-1860: New evidence

Abstract Between 1850 and 1860 the total “pauper rate”-the number of individuals receiving public assistance per 1,000 population-increased from 5.8 to 10.2. We explore the determinants of the rise in antebellum pauperism using previously enexploited archival data. Changing labor market conditions, urbanization, and immigration led to a marked increase in the demand for public assistance. Antebellum taxpayers, however, were unwilling to maintain the generosity of relief at existing levels in the face of the rise in demand.

Promoting Innovation in the Electricity Industry

Smart metering can bring significant benefits to electricity markets by allowing customers to reduce demand or increase supply when generation capacity is temporarily scarce. To reap the full efficiency and environmental benefits of this technology, regulators must allow price volatility and free entry into the market. The efficiency gains are enormous as both demand and supply will be affected by both temporary and longer-lasting price changes. Experiments have shown the value of this approach.

Was there a nineteenth century welfare magnet in the United States?: Preliminary results from New York City and Brooklyn

Abstract This paper examines the inter-jurisdictional migration effects of a very specific and localized shock to the distribution of outdoor poor relief (a precursor to the current welfare system) during the late nineteenth century. In 1878, the city of Brooklyn decided to eliminate all outdoor relief payments leaving only the highly undesirable option of entering the poor house. One option for poor Brooklyn residents was to travel to nearby New York City (at this time still different cities) and claim outdoor relief payments. The results of this early natural experiment suggest that the welfare magnet was not operating in the sense that there is little evidence to suggest that Brooklyn residents migrated to New York City to claim public outdoor relief.

Network Regulation Through Ownership Structure: An Application to the Electric Power Industry

We illustrate the properties of a competitive joint venture (CJV) institution as an alternative to traditional natural monopoly regulation of the distribution wires portion of the electricity supply chain. This CJV institution consists of an endogeneous ownership rule and a wires access charge determination rule, with wires use and control rights determined by a firms market share in the downstream retail market. By exploiting the vertical structure of the electricity supply chain, this CJV institution can generate superior efficiency results in a model presented and analyzed here. The role of the regulator is one of ex post contractual enforcement; thus this institution is not prone to the information problems associated with traditional natural monopoly regulation. We demonstrate that first-best efficiency characterizes equilibrium in a pricing model without investment.

Standard Market Design in Wholesale Electricity Markets: Can FERC’s Proposed Structure Adapt to the Unknown?

Abstract The SMD proposal focuses on wholesale markets and transmission in isolation, not on ways to encourage a more market-based retail approach. As long as it remains so supply-focused, policy will be like one hand clapping, leading to potential overinvestment in transmission and costly future revisions of institutions.

Beneficial Complexity: A Field Experiment in Technology, Institutions, and Institutional Change in the Electric Power Industry

This paper presents and analyzes the results of a recent field experiment in which residential electricity customers in Washington State with price-responsive in-home devices could use those devices to change their electricity consumption autonomously. Doing so also required an important institutional change: the regulatory institutions had to change to allow dynamic pricing. Customers could choose a retail pricing contract from a portfolio of contracts, instead of the fixed, regulated retail rate. Here we focus on the results of the real-time contract, under which homeowners participate in a double auction with a market clearing occurring every five minutes. These customers saved money, and their peak demand (and pressure on infrastructure at peak capacity) fell by 15 percent. Moreover, this combination of technology and institutional design enabled decentralized coordination, and we use complexity science to interpret results that show that the real-time market outcomes were those of a self-organizing and scalable complex adaptive system. We also draw policy implications from these results.

The Long Road to Recovery: Postcrisis Coordination of Private Charity and Public Relief in Victorian Lancashire

When an unprecedented and unanticipated downturn strikes a community, resources from disparate sources combine to aid those harmed by the distress. Today as in the past, public and private sources coordinate relief efforts, and the persistence of distress beyond that which had been anticipated and provided for by insurance brings in resources from outside the community. However, it is possible to crowd out a resource when the efforts of one source decrease the efforts of another. Modern research documents public welfare crowding out private charity (see, for example, Abrams and Schmitz 1978), and this also occurred in the past. Exploring this kind of concern, the present article highlights aspects of income assistance that played a role during the Lancashire cotton famine (1861-65).

Incumbent Vertical Market Power, Experimentation, and Institutional Design in the Deregulating Electricity Industry

Incumbent vertical market power in deregulating markets can be anticompetitive, as seen in the current process of retail electricity restructuring. This paper uses the AT&T antitrust case’s Bell Doctrine precedent of “quarantine the monopoly” as a case study in incumbent vertical market power in a regulated industry. It then extends the Bell Doctrine by presenting an experimentation-based theory of competition, and applies this extended framework to analyzing the changing retail electricity industry. The general failure to quarantine the monopoly wires segment and its regulated monopolist from the potentially competitive downstream retail market contributes to the slow pace and lackluster performance of retail electricity markets for residential customers.

From Airbnb to Solar: Toward a Transaction Cost Model of a Retail Electricity Distribution Platform

Digital technologies have reduced transaction costs and led to platform business models and the sharing economy. Platform business models are increasingly part of policy debates in electricity distribution and retail due to the proliferation of digital and distributed energy resource (DER) technologies, such as residential rooftop solar. What are the implications of falling transaction costs and platform business models in electricity distribution and retail, and in the burgeoning markets for DERs? Our core insight is that excess capacity is variable, and varies inversely with transaction costs. Digital platform business models enable asset owners to rent out this excess capacity. Here we propose a two-stage transaction cost model to represent the effects of transaction cost-reducing innovation on two aspects of such transactions: gains from trade in sharing, and the margin that divides renters from owners. We analyze the equilibrium comparative statics of the model to derive observable predictions, and find that the rental market option makes the opportunity cost of excess capacity salient. As peer-to-peer transactions in energy capacity become more feasible, our results suggest that ownership of DER capacity will be driven less by ones expected intensity of use and more by relative price concerns and subjective preferences for energy self-sufficiency or environmental attributes.