Varun Sivaram

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New Nobel Economics Winner Jean Tirole on Energy, Climate, and Environment

by Michael Levi
October 13, 2014

noble economics jean tirole energy environment climate REUTERS/Fred Lancelot


Jean Tirole was awarded the Nobel Memorial Prize in Economic Sciences today “for his analysis of market power and regulation”. It shouldn’t come as a surprise, then, that he’s written a lot about energy, climate change, and environmental issues. Here’s a quick selection of his relevant papers.

I’d like to try an experiment: Lots of this blog’s readers are experts in the areas covered by these papers. I invite you to read a paper from this list and either summarize or riff on it in the comments, so that everyone who reads this can benefit.

Climate Change

Some Economics of Global Warming

Some Political Economy of Global Warming

Regional Initiatives and Cost of Delaying Binding Climate Change Agreements

Climate change negotiations: Time to reconsider


Pollution Permits and Environmental Innovation

Pollution Permits and Compliance Strategies” (paywall)

Environmental policy, compliance, and innovation” (paywall)

From Pigou to Extended Liability: On the Optimal Taxation of Externalities under Imperfect Financial Markets


Reliability and Competitive Electricity Markets

Retail Electricity Competition

Merchant Transmission Investment

Transmission rights and market power on electric power networks I: Financial Rights

Transmission rights and market power on electric power networks II: Physical Rights

Post a Comment 6 Comments

  • Posted by Dave Lowry

    I’ve read: “Climate change negotiations: Time to reconsider”
    Atfer reading that, I feel the need to say that Jean Tirole has probably never read any definition of the UNFCCC (Climate Change Convention); which defines in Art. 1: “Climate change” means a change of climate…. , and has no definition about ‘weather’. More at:
    A top scientist should be able to see whether he is working with reasonable terms and definitions, or merely with meaningless words.

  • Posted by David B. Benson

    I’m an engineer, not an economist.

    I read, rather quickly, “Reliability and Competitive Electricity Markets” and “Retail Electricity Competition”. Using a variety of unrealistic idealizations, the authors sometimes obtain a form of optimality via pricing. But a simple weakening on assumptions, in the second paper, leads to a no-known-optimum for any pricing methods considered.

    These conclusions agree with my understanding of electricity price setting via a utility rate commission; the process is largely political and poorly informed by economic theory of any form.

  • Posted by Jonah Busch


    Thanks for providing this useful and timely resource.

    In “Some Economics of Global Warming,” Professor Tirole laid out a five-step plan to fix the climate, which he reiterated in “Climate change negotiations: Time to reconsider.” This was in 2009, in the run-up to the ill-fated Copenhagen climate summit later that year.

    In a blog on the Center for Global Development website entitled “Nobel Laureate Jean Tirole’s Five-Step Plan to Fix the Climate” I revisit Tirole’s plan and discuss how the five steps he proposed five years ago are currently faring. In short, some of the steps are progressing while others are not, but all five remain as important as ever as the world once again gears up to agree on climate in December 2015 in Paris, in Tirole’s home country.


  • Posted by David B. Benson

    “Merchant Transmission Investment”: From the abstract we have “Relying primarily on a market driven investment framework to govern investment in electric transmission networks is likely to lead to inefficient investment decisions and undermine the performance of competitive markets for electricity.”

    So I’ll not attempt to read this paper. Considering various experiences, over decades, of deciding upon transmission appears to me to be based more on where the demand and generation lie. It has also become increasingly difficult to obtain permits for transmission corridors.

  • Posted by David B. Benson

    “Transmission rights and market power on electric power networks I: Financial Rights”

    “Transmission rights and market power on electric power networks II: Physical Rights”

    both seem realistic. The simple model is apt in that North can stand for Bonneville Power Administration (BPA) with the vast hydropower of the Columbia River System and South can stand for California. Possibly these two papers have helped rationalize the negations between the California ISO and BPA in recent years.

    Of the six papers related to electrical power grids these two struck me as the most realistic and immediately useful.

  • Posted by Jack William

    Greenhouses remain an important part of horticulture today, and plastic transparent materials have also been used to similar effect in polytunnels and row covers.

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