The Political Sustainability of Carbon Control Policies in an Evolutionary Economics Setting

by Steven C. Isley

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This work represents a first attempt at analyzing the long term coevolution of market structures, technological change and government institutions. An empirical analysis of the U.S. electric power sector was conducted to validate the Grossman and Helpman (1994) "Protection for Sale" framework for use in modeling the interaction between the government and market actors. An agent based model with endogenous technological change was then used to explore how lobbying affects different carbon control policies as they evolve over time. In the empirical analysis, many electric power companies were found to benefit greatly from high carbon prices and can be expected to lobbying for such policies. In fact, in many situations the total near-term profit of the electric power industry increases with a price on carbon. The model was able to correctly identify nine of the top twelve contributing firms based on PAC contributions.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Background

  • Chapter Three

    Empirical Analysis

  • Chapter Four

    Model Overview

  • Chapter Five

    Model Exploration Methodology

  • Chapter Six

    Policy Results

  • Chapter Seven

    Conclusion

  • Appendix A

    Model Details

  • Appendix B

    General Modeling Notes

  • Appendix C

    Experimental Design Specifications

  • Appendix D

    Maplight PAC to eGrid Power Plant Owner

Research conducted by

This document was submitted as a dissertation in May 2014 in partial fulfillment of the requirements of the doctoral degree in public policy analysis at the Pardee RAND Graduate School. The faculty committee that supervised and approved the dissertation consisted of Robert Lempert (Chair), Steven W. Popper, and Ted Parson.

This report is part of the RAND Corporation Dissertation series. Pardee RAND dissertations are produced by graduate fellows of the Pardee RAND Graduate School, the world's leading producer of Ph.D.'s in policy analysis. The dissertations are supervised, reviewed, and approved by a Pardee RAND faculty committee overseeing each dissertation.

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