IAEE Members and subscribers to The Energy Journal: Please log in to access the full text article or receive discounted pricing for this article.

Allocating the Added Value of Energy Policies

Developing an energy policy from a collection of programs is made more complicated because there is no single value that can be used as a best estimate of the contribution of a single policy, despite the ability to estimate the impact of the complete suite. In this paper we illustrate the problem and use cooperative game theory to show one way to estimate individual effects of a policy goal in the context of collective estimates. Using an economic equilibrium model, we illustrate the behavior of four policies, namely, a gasoline tax, CAFE standards, a carbon tax, and drilling the Arctic National Wildlife Reserve, through their Shapley value contributions in measuring the impact of each in the context of a suite of policies. We apply the Shapley value to measure the average marginal reduction in imports for each policy, and present a number of scenarios that illustrate how the Shapley value behaves as a measure of policy contribution.

Purchase ( $25 )

Energy Specializations: Energy Efficiency; Energy and the Environment – Policy and Regulation; Energy and the Economy – Energy as a Productive Input; Energy and the Economy –Economic Growth and Energy Demand; Energy and the Economy – Resource Endowments and Economic Performance; Energy and the Economy – Energy Shocks and Business Cycles

JEL Codes: Q41: Energy: Demand and Supply; Prices, Q40: Energy: General, C70: Game Theory and Bargaining Theory: General, C72: Noncooperative Games, Q54: Climate; Natural Disasters and Their Management; Global Warming

Keywords: Energy policy, gas tax, carbon tax, CAFÉ, ANWR, US

DOI: 10.5547/ISSN0195-6574-EJ-Vol27-No2-8

Published in Volume 27, Number 2 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


© 2023 International Association for Energy Economics | Privacy Policy | Return Policy