Bren School OF ENVIRONMENTAL SCIENCE & MANAGEMENT University of California, Santa Barbara

 

 

 

 

 

 

 

 

 

 

 

Presents

 

 

 

Stephen Hamilton

Associate Professor of Economics

The Orfalea College of Business

Cal Poly State University
Thursday, April 14^th, 2005

3:30 – 4:30; North Hall 2212

 

"Marketable Permits, Low-Sulfur coal, and the Behavior of Railroads"

 

In light of the U.S. Clean Air Act Amendments of 1990, the performance of markets for delivered low-sulfur coal to electric utilities is a subject of growing importance.  This paper examines the efficiency of low-sulfur coal markets in a three-sector model of mines, railroads, and utilities.  Lerner indices are derived for individual mine-utility pairs and market power is estimated along individual railroad using data on freight revenues and costs.  The results indicate that railroads hauling low-sulfur coal from Wyoming's Powder River Basin exercise a significant degree of market power.  This finding points to a general ineffectiveness of environmental policy in increasing the utilization of low-sulfur coal.  Instead, increased deliveries of low-sulfur coal appear to be driven predominately by declining costs in upstream mining and transport markets.

 

http://www.econ.ucsb.edu/~mcauslan/wyocoal.pdf

 

*Sponsored by Professor Carol McAusland*