Working Papers

Selected working papers by team members

Firms and Households during the Pandemic: What do we learn from their electricity consumption?” O. Bover, N. Fabra, S. García-Uribe, A. Lacuesta, R. Ramos. Working paper.

We analyze the impact of the COVID-19 pandemic on electricity consumption patterns in Spain. We highlight the importance of decomposing total electricity consumption into consumption by firms and by households to better understand the economic and social impacts of the crisis.

Air Pollution from Agricultural Fires Increases Hypertension Risk” H. K. Pullabhotla and M. Souza. Working paper.

We provide causal estimates of the impact of short-term air pollution on hypertension risk. We find that the incidence of high blood pressure increases by 1.8% for each standard deviation increase in exposure to upwind fires. That implies that one additional μg/m3 of PM2.5 increases hypertension risk by 3.8 per thousand. We find that the impact is stronger among older males, smokers, individuals that were already on blood pressure medication, and individuals belonging to socially marginalized groups.

Technology-Neutral vs. Technology-Specific Procurement” N. Fabra, J. Montero. Working paper.

An imperfectly informed regulator needs to procure multiple units of a good that can be produced with heterogeneous technologies at various costs. Should she run technology-specific or technology-neutral auctions?

The implicit cost of carbon abatement during the COVID-19 pandemic” N.Fabra, A. Lacuesta, and M. Souza. Working paper.

We compare the “degrowth” versus the “decoupling” strategies for carbon abatement, by leveraging the COVID-19 crisis as a natural experiment. Our focus is on the Spanish economy, and in particular, on its power sector. The GDP loss (degrowth) attributable to the pandemic was around 133 Billion Euros, which compared to total emissions reductions (20.4 Million Tons), gives an implicit cost of carbon in the thousands. In turn, power-sector CO2 emissions went down by 3.8 Million Tons (almost 5%). Investing in renewables to achieve similar abatement would have an implicit cost of carbon closer to 57 Euros/Ton.

Storing Power: Market Structure Matters” D. Andrés-Cerezo and N. Fabra. Working paper.

We assess firms’ incentives to operate and invest in electricity storage facilities under different market structures, including competitive and strategic storage owners in the cases in which the storage owner is integrated with a dominant electricity producer or it is a stand-alone firm. The results are key to understand how to regulate electricity storage, an issue which is critical for the deployment of renewables in electricity markets.

Preparing for the next crisis: How to secure the supply of essential goods and services” N. Fabra, M. Motta, and M. Peitz. Working paper.

The COVID-19 crisis has demonstrated a lack of preparedness for pandemics and other global crises. Private incentives are often insufficient to be prepared for rare events with a large negative effect. Instead, governments and supranational institutions should implement mechanisms for prevention, detection and mitigation of crises. Electricity capacity markets provide important lessons for the provision of essential goods in such events.

Predictive Counterfactuals for Treatment Effect Heterogeneity in Event Studies with Staggered Adoption” M. Souza. Working paper | SSRN Working paper.

This paper introduces a machine-learning based approach for estimation of treatment effect heterogeneity in event studies with staggered adoption. Simulations demonstrate how the approach can be accurate and efficient, even in complex settings where effects vary across time. The method is applied to recover heterogeneity of effects from a large residential energy efficiency program.

Variable Pricing and the Cost of Renewable Energy” Imelda, M. Roberts, and M. Fripp. NBER working paper | Working paper.

We evaluate the potential gains from dynamic pricing in high-renewable systems using a novel model of power supply and demand response. We find that dynamic pricing increases social surplus up to 23 percent in a 100 percent renewable power system. High renewable systems, including 100 percent renewable, are remarkably affordable.

Auctions with Privately Known Capacities” N. Fabra, and G. Llobet. Slides|  CEPR working paper 14060 | Working paper.

We characterize bidding equilibria and market outcomes in renewables-dominated systems. A key feature of the model is that the availability of renewable capacity is random and it is private information.

Clean Energy Access: Gender Disparity, Health, and Labor Supply ” Imelda and Anjali P. Verma. Working paper.

We investigate the implication of a large scale household clean energy transition and find that improvement in women’s health, particularly among those who spend most of their time indoors doing housework, can drive the increase in their productivity, hence allowing them to supply more market labor.

Market Power and Price Exposure: Learning from Changes in Renewables Regulation” N. Fabra and Imelda. Working paper NEW VERSION! | Slides

Is it possible to reduce price discrimination while enhancing social welfare? In this paper, we explore how forward contracts could contribute towards both goals.

Work in Progress

Selected ongoing work by team members

The Distributional Impacts of Real-Time Pricing” Cahana, M., Fabra, N., Reguant, M. and J. Wang

We examine the distributional impacts that occur as a result of the adoption of Real-Time Pricing for Spanish households.

Published Papers

Selected publications of the team members

2.Energy Economics

“Large-scale Battery Storage, Short-term Market Outcomes, and Arbitrage”. Stefan Lamp, and Mario Samano. Energy Economics, volume 107, 105786.

The expansion of the share of renewable energy in the portfolio mix of the electricity generation sector has accelerated the development and integration of large-scale battery storage facilities. We document charging and discharging patterns in the California market and show how the utility-scale batteries’ activity correlates with load and real-time prices during 2018 and 2019. The empirical findings are partially consistent with the optimal solution of an arbitrage maximizer, indicating that battery owners respond to price incentives only at certain hours of the day. In addition, we provide evidence that battery deployment in the years 2013 through 2017 lowered average intra-day
wholesale price spreads and that current market conditions limit the profitability of
batteries in this market.


“The economics of the energy transition” Special Issue, edited by Natalia Fabra, Xavier Labandeira. SERIEs, Avaliable online 02 June 2021.

The Energy Transition is underway. An increasing number of countries—with Europe, and now the USA, leading the way—have committed to drastically reducing their emissions during the coming decades. The European Green Deal, that was announced in Madrid in December 2019 just before the COVID-19 hit our economies, was the first of a series of commitments to reach carbon neutrality no later than 2050. The European Recovery and Resilience Plan, with its green and digital conditionality, has backed this ambition by providing funds which will accelerate the achievement of this goal. All sectors of the economy—with no exception—will be impacted by this challenge: power, transportation, construction or agriculture, to name just a few, will go through profound structural changes which will bring in opportunities, but also risks and challenges. Likewise, the Energy Transition will have deep socio-economic implications, which will broadly depend on the set of regulatory and tax policies that will be put in place.

This Special issue, edited by Natalia Fabra and Xavier Lavandeira, gathers a set of articles that address these challenges and opportunities.


The Energy Transition: An Industrial Economics Perspective” Natalia Fabra, International Journal of Industrial Organization,  Volume 79, 102734, 2021.

Addressing climate change requires full decarbonization of our economies. Whether this objective is achieved at least cost for society hinges on good policy design. In turn, this calls for a thorough understanding of firms’ and consumers’ incentives in the presence of asymmetric information, the determinants of strategic interaction, and the impact of market design and market structure on the intensity of competition. Industrial Economics thus has much to contribute towards a successful Energy Transition, while benefiting from the exciting research opportunities it brings. In this paper, I survey some of the recent developments in this area. My focus is on the power sector, and in particular, on the regulatory and market design challenges triggered by the expansion of intermittent renewables with almost zero marginal costs. I conclude with some questions that merit further research.

1.American Economic Association Papers Proceedings

Estimating the Elasticity to Real Time Pricing: Evidence from the Spanish Electricity Market” Natalia Fabra, David Rapson, Mar Reguant, and Jungyuan Wang , American Economic Association Papers & Proceedings,  vol. 111, May 2021.

We estimate consumer response to the first large-scale real-time electricity pricing (RTP) program. In 2015, RTP became the default tariff for residential customers in Spain, exposing them to prices that vary hourly based on day-ahead wholesale prices. Using expected national wind production as an instrument for price, we estimate household-level demand elasticities for RTP households and non-RTP (placebo) households. Estimates show no difference in behavior across RTP and non-RTP households. Reasons for non-response may include low potential gains or high non-monetary costs of information acquisition and behavioral change. We discuss implications for optimal dynamic electricity pricing.


Cooking That Kills: Cleaner Energy Access, Indoor Air Pollution, and Health” Imelda, Journal of Development Economics, 2020.

I find significant health benefits from a large scale clean energy transition, suggesting that subsidizing of cleaner-burning fuels can pay public health dividends. 


Social comparison nudges without monetary incentives: Evidence from home energy reports” Myers E. and M. Souza, Journal of Environmental Economics and Management,  101, 102315, 2020

We explore the mechanisms driving the effectiveness of a widely-used behavioral intervention to promote energy conservation. Results suggest that the nudges induce almost no behavioral changes for heating demand in settings where tenants do not directly pay for energy.

2.Energy Economics

Incentives for Information Provision: Energy Efficiency in the Spanish Rental Market” Bian, X. and N. Fabra. Energy Economics, 2020.

We assess landlords incentives to obtain and disclose energy efficiency certificates in the rental market. We show that incentives to provide energy efficiency information are higher in markets with higher penetration of certificates.

1.American Economic Association Papers Proceedings

Indoor Air Pollution and Infant Mortality: A New Approach” Imelda, American Economic Association Papers & Proceedings,  108, 416-421, 2018

We evaluate the effects of a program, implemented by the Indonesian government, which promoted the substitution of kerosene by gas as cooking fuel. We find that four fewer infants died per 10,000 live births than would have in the absence of the program.


Why are rented dwellings less energy-efficient? Evidence from a representative sample of the U.S. housing stock” Souza, M., Energy Policy,  118, 149-159, 2018

This paper compares energy-efficient appliance adoption rates across U.S. residential markets. Results suggest that renters are less likely than homeowners to have energy-efficient appliances. Differences are attenuated when landlords pay the utility bills, when energy prices are higher, and for longer-term rentals.

2.Energy Economics

A Primer on Capacity Mechanisms” Fabra, N., Energy Economics, 75, 323-335, 2018

We model the need and effects of capacity mechanisms in electricity markets. We find that combining price caps and capacity payments allows to disentangle the two-fold objective of inducing the right investment incentives while mitigating market power.

3.American Economic Review

Pass-through of Emissions Costs in Electricity Markets”, Fabra, N., and M. Reguant, American Economic Review, 104(9), 2872-2899, 2014

We find that the pass-through rate of carbon prices to electricity prices in the Spanish electricity market is above 80%. The high frequency of auctions and the symmetry across all firms’ technology portfolios contribute to such a high pass-through rate.

4.European Economic Review

How to Allocate Forward Contracts: the case of electricity markets”, Fabra, N., and M.-A. de Frutos, European Economic Review, 56(3), 451-469, 2012

We model strategic bidding behavior in electricity markets. We show that allocating forward contracts across firms contributes to mitigating market as long as the contract allocation makes all firms virtually symmetric.

5.Economic Journal

Market Design and Investment Incentives”, Fabra, N., N-H von der Fehr and M-A de Frutos, Economic Journal, 121, 1340-1360, 2011

We assess firms’ investment incentives in electricity generation capacity when the energy market is organized as either a uniform-price auction or a discriminatory auction. We find that investment incentives are similar across the two auction formats, while prices tend to be lower under the discriminatory auction.

6.Energy Economics

Supply Security and Short-Run Capacity Markets for Electricity”, Fabra, N., and A. Creti, Energy Economics, 29 (2), 259-276, 2007

We model the interaction between capacity markets and energy markets when nearby countries rely on scarcity pricing to induce capacity investments.

7.RAND Journal of Economics

Designing Electricity Auctions”, Fabra, N., N-H von der Fehr, and D. Harbord, Rand Journal of Economics, 37 (1), 23-46, 2006

We model strategic bidding behavior in electricity markets organized as either uniform-price auctions or discriminatory auctions. We show the latter mitigate market power, resulting in lower albeit more volatile prices.

8.International Journal of Industrial Organization

Price Wars and Collusion in the Spanish Electricity Market”, Fabra, N., and J. Toro, International Journal of Industrial Organization, 23 (3-4), 155-181, 2005

We study the occurrence of price wars in the Spanish electricity market. We find evidence consistent with the use of such price wars as disciplining devices among colluding firms.

9.Energy Journal

The Spanish Electricity Industry: Plus ca Change” con Claude Crampes, Energy Journal, 26, 2005

We describe regulatory changes in the Spanish electricity market, which is embarked in an ongoing process of reform.

10.Journal of Industrial Economics

Tacit Collusion in Repeated Auctions: Uniform versus Discriminatory auctions”, Journal of Industrial Economics, 51 (3) 271-293, 2003

We show that tacit collusion is more easily sustainable under uniform-price auctions as compared to discriminatory auctions.