lecture_natgas_lucas_paper_fall11

lecture_natgas_lucas_paper_fall11 - Allocative Costs of...

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Allocative Costs of Price Controls (in competitive markets) ECON 489/689
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What Were the Consequences of Natural Gas Wellhead Regulation? Price ceilings were imposed on interstate trades of natural gas from 1954-1989. Questions: 1) How large were the welfare losses? 2) Why did the price ceilings impose costs even after they were lifted in 1989? 3) How were these costs distributed geographically? Source paper: “The Allocative Costs of Price Ceilings”, by Lucas Davis and Lutz Kilian, 2011
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Natural Gas Consumption
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If Gas Follows the Highest Price…
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Effect of Inter state Price Controls Will Depend on Where Gas is Produced and Consumed Production….
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Where Does It Go?
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Recall, there’s reason to believe that natural gas field production is relatively competitive…
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The “Textbook” Deadweight Loss Figure “The Allocative Costs of Price Ceilings”, by Lucas Davis and Lutz Kilian, 2009
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What Assumptions are Behind the Textbook Figure?
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lecture_natgas_lucas_paper_fall11 - Allocative Costs of...

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