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  4. May 2013
  5. Transportation Fuels Policy since the OPEC Embargo: Paved with Good Intentions

Transportation Fuels Policy since the OPEC Embargo: Paved with Good Intentions

  • Christopher R. Knittel
American Economic Review
vol. 103, no. 3, May 2013
(pp. 344-49)
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Abstract

A long line of research investigates whether the retail prices of electricity and natural gas send proper signals about scarcity in order to induce efficient consumption. Historically, regulated utilities have not designed tariffs that set marginal prices equal to marginal costs. Currently, some jurisdictions are opening the retail sectors to competition via "retail choice." These new regimes replace imperfect regulation with imperfect competition as the process by which retail tariffs are formed. We discuss the challenges in evaluating the efficiency of tariffs and present evidence of how pricing has changed in markets with retail choice.

Citation

Knittel, Christopher R. 2013. "Transportation Fuels Policy since the OPEC Embargo: Paved with Good Intentions." American Economic Review, 103 (3): 344-49. DOI: 10.1257/aer.103.3.344

Additional Materials

JEL Classification

  • H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
  • L71 Mining, Extraction, and Refining: Hydrocarbon Fuels
  • L78 Industry Studies: Primary Products and Construction: Government Policy
  • Q41 Energy: Demand and Supply
  • Q48 Energy: Government Policy
  • R41 Transportation: Demand, Supply, and Congestion; Safety and Accidents; Transportation Noise
  • R48 Transportation Systems: Government Pricing and Policy