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Can Utility Commissions Improve on Environmental Regulations?


  • Daniel E. Dodds
  • Jonathan A. Lesser


Using a second best framework, we determine the situations in which Public Utility Commissions (PUCs) can conceivably improve on existing environmental regulations. For resource choice decisions, PUCs can improve on welfare by adjusting the private costs associated with each option by the difference between the total external costs of that option and any pollution taxes or fees that would be paid were the resource developed. In regulating dispatch and pricing decisions, PUCs can increase welfare by taking into account any difference between a power plant's marginal private cost and its marginal social cost as constrained by the environmental regulations.

Suggested Citation

  • Daniel E. Dodds & Jonathan A. Lesser, 1994. "Can Utility Commissions Improve on Environmental Regulations?," Land Economics, University of Wisconsin Press, vol. 70(1), pages 63-76.
  • Handle: RePEc:uwp:landec:v:70:y:1994:i:1:p:63-76

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    Cited by:

    1. Burtraw, Dallas & Palmer, Karen L. & Krupnick, Alan J., 1995. "'Second-Best' Adjustments to Externality Estimates in Electricity Planning with Competition," Discussion Papers 10753, Resources for the Future.
    2. Hobbs, Benjamin F & Horn, Graham TF, 1997. "Building public confidence in energy planning: a multimethod MCDM approach to demand-side planning at BC gas," Energy Policy, Elsevier, vol. 25(3), pages 357-375, February.
    3. Burtraw, Dallas & Krupnick, Alan J., 1996. "The Second-Best Use of Social Cost Estimates," Discussion Papers 10693, Resources for the Future.
    4. Thomas Sadler, 2000. "Regulating chemical emissions with risk-based environmental taxation," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 6(2), pages 287-305, May.
    5. Dallas Burtraw & Karen Palmer & Alan J. Krupnick, 1997. ""Second-Best" Adjustments to Externality Estimates in Electricity Planning with Competition," Land Economics, University of Wisconsin Press, vol. 73(2), pages 224-239.
    6. Bolduc, Steven R., 2004. "Ceremonial dimensions of market-based pollution control instruments: the clean air act and the cap-and-trade model," Utilities Policy, Elsevier, vol. 12(3), pages 181-191, September.
    7. Burtraw, Dallas & Krupnick, Alan J., 1996. "The second-best use of social cost estimates," Resource and Energy Economics, Elsevier, vol. 18(4), pages 467-489, December.
    8. Freeman III, A. Myrick, 1996. "Estimating the environmental costs of electricity: an overview and review of the issues," Resource and Energy Economics, Elsevier, vol. 18(4), pages 347-362, December.
    9. repec:kap:iaecre:v:6:y:2000:i:2:p:287-305 is not listed on IDEAS
    10. Meredith Fowlie, 2008. "Incomplete Environmental Regulation, Imperfect Competition, and Emissions Leakage," NBER Working Papers 14421, National Bureau of Economic Research, Inc.

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