Essays in Industrial Organization and Environmental Economics

Abstract

Many policymakers and economists consider an economy-wide carbon price to be the most efficient way to reduce the impact of human activities on climate change and the environment. Other policies designed to encourage development and adoption of new technologies to combat climate change are often labeled second-best. However, privately optimal choices in innovation and technology adoption often deviate from what is socially optimal, independent of any considerations for environmental externalities. This manuscript demonstrates that environmental policy should take into account choices by and strategic interactions among consumers and firms by studying compatibility choices in the U.S. electric vehicle market and cost pass-through in the Minnesota E85 retail market. I find that social welfare would improve if the U.S. electric vehicle market had developed throughout 2011-2015 with a unified vehicle charging standard. I also find that Minnesota retailers on average pass through only half of their cost changes due to the Renewable Fuel Standard (RFS), which suggests that the RFS can be improved to achieve greater biofuel market shares than previously achieved.