We consider a smart grid with an independent system operator (ISO), and distributed aggregators who have energy storage and purchase energy from the ISO to serve its customers. All the entities in the system are foresighted: each aggregator seeks to minimize its own long-term payments for energy purchase and operational costs of energy storage by deciding how much energy to buy from the ISO, an...

This paper studies the efficiency of competitive equilibria in environments with a moral hazard problem and unobserved states, both with retrading in ex post spot markets. The interaction between private information problems and the possibility of retrade creates an externality, unless preferences have special, restrictive properties. The externality is internalized by allowing agents to contra...

Pecuniary externalities have regained the interest of researchers as they seek policy interventions and regulations to remedy externality-induced distortions, e.g., balance sheet effects, amplifiers and fire sales. We show how bundling, exclusivity and additional markets internalize these pecuniary externalities; ex ante competition can achieve a constrained-efficient allocation. We cover a lar...

We study the optimal pricing policy of a strategic monopolist selling durable goods in a dynamic pricing game with multiple rounds. Customers are forward-looking and experience a (positive) network externality, i.e., each customer’s utility depends not only on her valuation of the item and the offered price, but also the weighted sum of the number of other customers who have purchased the item....

This paper postulates the conceptually useful allegory of a futuristic “World Climate Assembly” (WCA) that votes for a single worldwide price on carbon emissions via the basic democratic principle of one-person one-vote majority rule. If this WCA framework can be accepted in the first place, then voting on a single internationallybinding minimum carbon price (the proceeds from which are domesti...

Socio-technical or strategic approach to renewable energy deployment all suggests that the uptake of renewable energy technology such as solar photovoltaic is as much a social issue as a technical issue. Among social issues, one most direct and immediate component is the cost of the renewable energy technology. Because renewable electricity provides no new functionality—a clean electron does th...

Recently Fisher-Vanden et al (2004) have used firm level data to estimate an energy intensity function for a large number of enterprises in China. This is the first study to use the regression approach to examining the relationships between fuel prices and fuel consumption in China. One of the major findings of the study is that firms are very responsive to relative fuel price changes. However,...

We examine experimentally an auction model with externalities in which competing firms bid for licenses to a cost-reducing technology. Since winning bidders impose a negative externality on the losers, bids must account for both the value of winning the auction and the negative value of losing brought about by rivals reducing their costs. Experimental treatments differ in the severity of the ne...