Energy & Environmental Economics & Policy

Today, more than any other time in history, significant attention is given to the environmental impacts of our energy policy, both upstream and downstream. At the same time, energy markets are being liberalized and opened to market-based competition. These 'deregulated' energy markets prioritize the lowest cost energy sources and sources that provide for the greatest reliability of the energy system, rather than those sources that provide for the least environmental degradation. The design of economically-efficient energy markets that also prioritize environmental protection requires advanced market designs and auction mechanisms that can effectively balance these competing criteria.

Coincidentally, these markets can suffer from the problem of imperfect competition (i.e., market power), in which a few dominant firms maintain the ability to influence prices. This imperfect competition not only results in market inefficiencies, but also inhibits these markets from effectively balancing the competing criteria of low costs, system reliability and environmental stewardship.

Economics of Resilience, Terrorism & Hazards

The consequences of terrorism events and large-scale natural disasters such as hurricanes can be significant. Besides loss of life, these events can have longstanding consequences for regional and national economies. Because of the inter-connectedness of modern economic systems, even localized events can have negative impacts that are felt throughout the economy or supply chain.

Businesses, households and governments are increasingly interested in methods, approaches and strategies that can make them more resilient to these systemic shocks. These include efforts to minimize the severity of the shock when it does occur, as well as strategies that can hasten recovery following the shock. These strategies and approaches help economies minimize business interruption.

Public Policy & Collaborative Governance

Academic research demonstrates that collaboration and public-private partnerships can improve public welfare. However, this is now always true.

Collaborative governance refers to the inter-sectoral division of labor through the use of public-private partnerships, government/non-profit partnerships or full-fledged tripartite collaboratives in which private firms, public agencies and non-profits collaborate. These collaboratives do not always improve social welfare, and oftentimes they are more time-intensive and result in increased costs to consumers, taxpayers or businesses.

The energy sector provides an instructive perspective on collaborative governance. All deregulated energy markets in the United States are structured as non-profits, even though they are a function of government. Regional environmental markets are also structured as non-profits. Structured as non-profits, firms and agencies can evade public disclosure legislation, engage in manipulative bidding practices in energy or environmental auctions, and oversight and watchdog organizations can be excluded.

Research with Experiments and Simulation

Much of today's economic and policy research utilizes tools and methods of simulation. Simulation allow researchers to evaluate alternative market designs and policy changes in a controlled environment free from most outside influences. Dormady's research simulation methodologies fall into two general categories; controlled laboratory experiments and repeated Monte Carlo simulation.

Controlled laboratory experiments make use of human subjects in a simulation lab where experimental controls can be obtained. Policy and market changes can be simulated against baseline market designs or status quo policies in large samples. Repeated Monte Carlo simulations provide a model-based simulation of a market or policy change. The simulations are conducted on a computerized interface and run thousands of times in order to measure the likely effects of parameter changes on market outcomes in large samples.

These simulations are of interest to policymakers in evaluating policies under consideration, as they are several orders of magnitude less costly to society than the alternative--implementing a policy that was poorly designed.