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Over the past eleven years, US electric utilities have faced significant changes to their competitive and regulatory environments. The Energy Policy Act of 1992 opened access to transmission for nonutility generating plants. Then, beginning with California in 1996, nearly half the states passed and a smaller number enacted restructuring legislation that involved complete retail access. The industry restructuring is designed to enhance economic efficiency at all levels of operation, including distribution, transmission, generation and retail services. The gains are likely to be largest in electric generation because generation costs are the largest component of end-use costs and restructuring has a larger impact on generation than on other segments of the electricity industry, such as transmission and distribution, which are likely to remain at least partially regulated. This chapter will evaluate changes in the efficiency of electric generation from restructuring. It both summarizes the current state of knowledge on the topic and serves as a roadmap for future work.

This article presents an empirical study of market power in the British electricity industry. Estimates of price-cost markups are derived using direct measures of marginal cost and several approaches that do not rely on cost data. Since two suppliers facing inelastic demand dominate the industry, most oligopoly models predict prices substantially above marginal costs. All estimates indicate that prices, while higher than marginal costs, are not nearly as high as most theoretical models predict. Regulatory constraints, the threat of entry, and financial contracts between the suppliers and their customers are considered as possible explanations for the observed price levels. (JEL L13, L94)

Current forecasts suggest that the vast majority of growth in energy demand will come from the developing world, and that China will play a major part in that growth. This paper presents evidence suggesting that the shape of the income distribution, which is typically omitted from forecasting models, plays a major role in driving household acquisition of energy-using durable goods in rural China. We use province-level data for rural households to show that the share of the population living above the poverty line is an important determinant of household appliance holdings even controlling for average household income.

We investigate the effects of political activity on pharmaceutical prices, focusing on the health care reform period in the early 1990s. We characterize firms based on their vulnerability to future price regulation and find that the more vulnerable firms were more likely to take various actions to forestall regulation, most notably coordinating on a specific percentage price increase during 1993. Since moderating price increases could have averted regulation, the coordination appears to be the industry's response to a collective action problem.

In Sub-Saharan Africa, there are active debates about whether increases in energy access should be driven by investments in electric grid infrastructure or small-scale "home solar" systems (e.g., solar lanterns and solar home systems). We summarize the results of a household electrical appliance survey and describe how households in rural Kenya differ in terms of appliance ownership and aspirations. Our data suggest that home solar is not a substitute for grid power. Furthermore, the environmental advantages of home solar are likely to be relatively small in countries like Kenya, where grid power is primarily derived from non-fossil fuel sources.