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This textbook explains the main economic mechanisms behind energy markets and assesses how governments can implement policies to improve how these markets function. Adopting a micro-economic perspective, the book systematically analyses the various types of market failures on the electricity and gas markets as well as coal, oil, hydrogen and heat markets to identify government policies that can improve welfare. These shortcomings include the natural monopoly and the public-good character of energy infrastructures; market power resulting from inflexibility of supply and demand; international trade restrictions; negative externalities concerning the use of fossil energy; positive externalities concerning innovative new energy technologies; information asymmetries with regard to the product characteristics of energy commodities; and other public concerns, such as energy poverty.
In turn, readers will learn about various measures that governments can use to address these market failures, including incentive regulation for electricity grids; international integration of wholesale energy markets; environmental regulatory measures like emissions trading schemes; subsidy schemes for new technologies; green-energy certificate schemes; and energy taxes. Given its scope, the book will appeal to upper-undergraduate and graduate students from various disciplines who want to learn more about the economics and regulation of energy systems and markets.
List of contents
Economic Analysis of Energy Markets: An Introduction.- Energy Carriers and Supply Chains.- Energy Markets and Energy Policies.- Microeconomic Perspective on Regulating Energy Markets.- Information Asymmetry in Retail Energy Markets.- Natural Monopoly in Transport and Distribution.- Reliability of Energy Supply as Semi-Public Good.- Externalities in Production and Consumption in Energy Markets.- Market Power in Wholesale and Retail Energy Markets.- International Restrictions on Trade in Energy.- Distributional Effects and Equity Concerns in Energy Markets.- Regulating Energy Markets: Concluding Remarks.
About the author
Machiel Mulder is a Professor of Regulation of Energy Markets and Director of the Centre for Energy Economics Research at the University of Groningen, the Netherlands. Previously he was Chief Economic Advisor at the Dutch energy regulator and Head of the Energy Department at the Netherlands Bureau for Economic Policy Analysis.
Report
"I found the book to be an up-to-date primer on energy markets, and the author does a good job of outlining the microeconomic principles that can be used to better understand energy markets and systems. Given Mulder's experience in government and academia, he provides a novel contribution to the literature by systematically analyzing different types of market failures and potential remedies offered by economic theory. Overall, Mulder's textbook should be a valuable reference for students and energy policy analysts." (J. Wesley Burnett, The Energy Journal, Vol. 43 (3), 2022)
