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Working Papers

The Energy Transition: a Balancing Act” Fabra, N., and M. Reguant. EEL Working Paper 119

Fossil Fuels and Renewable Energy: Mix or Match?” Fabra, N., and G. Llobet. EEL Working Paper 118

Observed Patterns of Use and Users of Free-Floating Car-Sharing” Fabra, N., C. Pintassilgo, and M. Souza.  EEL Working paper 117

Energy Tax Exemptions and Industrial Production” Gerster, A., and S. Lamp. EEL Working paper 116

Electricity Markets in Transition: A proposal for reforming European electricity markets” Fabra, N. EEL Working paper 115

Do Renewable Energies Create Local Jobs?” Fabra, N.,  E. Gutiérrez, A. Lacuesta, and R. Ramos. EEL Working paper 114

The Distributional Impacts of Real-Time Pricing” Cahana, M., N. Fabra, M. Reguant, and J. Wang. EEL Working paper 113

The Energy Transition: An Industrial Economics Perspective” Fabra, N. EEL Working paper 200

Firms and Households during the Pandemic: What do we learn from their electricity consumption?” Bover, O., N. Fabra, S. García-Uribe, A. Lacuesta, and R. Ramos.  EEL Working paper 112

Air Pollution from Agricultural Fires Increases Hypertension Risk” Pullabhotla, H. K., and M. Souza. EEL Working paper 111

Technology-Neutral vs. Technology-Specific Procurement” Fabra, N., and J. P. Montero. EEL Working paper 110

The implicit cost of carbon abatement during the COVID-19 pandemic” Fabra, N., A. Lacuesta, and M. Souza EEL Working paper 109

Storing Power: Market Structure Matters” Andrés-Cerezo, A., and N. Fabra. EEL Working paper 108

Predictive Counterfactuals for Treatment Effect Heterogeneity in Event Studies with Staggered Adoption” M. Souza. EEL Working paper 107

Preparing for the next crisis: How to secure the supply of essential goods and services” Fabra, N., M. Motta, and M. Peitz. EEL Working paper 106

Market Power and Price Discrimination: Learning from Changes in Renewables Regulation” Fabra, N., and Imelda. EEL Working paper 105. Appendix. Slides.

Incentives for Information Provision: Energy Efficiency in the Spanish Rental Market” Bian, X., and N. Fabra. EEL Working paper 104

Clean Energy Access: Gender Disparity, Health, and Labor Supply” Verma, A. P., and Imelda. EEL Working paper 103

Variable Pricing and the Cost of Renewable Energy” Imelda, M. Roberts, and M. Fripp. EEL Working paper 102

Cooking That Kills: Cleaner Energy Access, Indoor Air Pollution, and Health” Imelda.  EEL Working paper 101

Auctions with Unknow Capacities: Understanding Competition among Renewables” Fabra, N., and G. Llobet. EEL Working paper 100

Work in Progress

Selected ongoing work by team members

Climate politics and the dynamics of green preferences” Andrés-Cerezo, D.

We analyze whether societies will adopt the environmental values and lifestyles required for tackling climate change. In particular, the paper
studies how the co-evolution between consumers\’ environmental concerns and the politics of environmental policies can achieve the energy transition. The results show that interventions by lobbying firms and environmental activists, even when short-lived, can have long-lasting effects.

Renewable energy and storage: friends or foes?” Fabra, N. and  Andrés-Cerezo, D.

We model an electricity market in which renewable energy coexists with storage. We show that the value of additional storage capacity is greater (lower) in markets with more renewable energy if the correlation between renewable energy and the net load is negative (positive). Furthermore, this degree of complementarity is higher the more market power there is in generation. We illustrate the model predictions with simulations of the Spanish electricity market.

The Welfare Effects of Sub-Metering.” Mayr, H. and M. Souza

In Switzerland it is often the case that buildings have a single meter that measures the aggregate energy consumption of all the apartments. Residents then split utility bills according to some pre-determined criteria. In this context, we study the effects of a large “sub-metering” program which introduces consumption measurements at the apartment-level, and thus allows charging residents accordingly.

The Energy Transition in the Manufacturing Sector Under Exchange Rate Risk.” Souza, M. and P. J. Ordoñez

Imported energy inputs are often invoiced in dollars, with prices linked to international markets. This may represent a substantial risk to firms in developing economies that face strong fluctuations in real exchange rates. We study how these types of fluctuations can affect the energy transition for the manufacturing sector in Colombia.

The Welfare Effects of Car Sharing.” Fabra, N., E. J. Muehlegger, and M. Souza

We match data from several sources to understand mobility patterns across the city of Madrid. We then build models for the choice of transportation mode, as well as the city’s congestion technology, taking into account the availability of parking across different areas. Within this context, we aim to estimate the effects of car sharing and transport-related carbon abatement policies, along several dimensions. 

Published Papers


Observed Patters of Free-Floating Car-Sharing Use. Natalia Fabra, Catarina Pintassilgo and Mateus Souza. SERIEs, Forthcoming.

Free-Floating Car-Sharing (FFCS) services allow users to rent electric vehicles by the minute without restrictions on pick-up or drop-off locations within the rental company’s service area. Beyond enlarging the choice set of mobility options, FFCS can reduce congestion and emissions in cities as they promote higher utilization rates of green vehicles. However, whether this potential is fully realized depends on the service’s usage and substitution patterns.


    The Energy Transition: a Balancing Act. Natalia Fabra and Mar Reguant. Resource and Energy Economics, Forthcoming.

    As the need for drastic reductions in global greenhouse gas emissions becomes increasingly urgent, governments and policymakers are developing proposals for climate change policies that aim to achieve net zero emissions. However, the challenge lies in determining the most effective way to operationalize this transformation. While cost efficiency is often emphasized as a desirable property, experience shows that it is neither necessary nor sufficient to achieve an optimal policy portfolio. Instead, we advocate for a broader definition of economic efficiency: policies must also be feasible, fair, effective, and credible. Trade-offs between these criteria are common and must be balanced to create a successful policy portfolio. The European experience provides interesting case studies with which to illustrate these efficiency dimensions and their implications.

      2.Energy Economics

      Reforming European electricity markets: Lessons from the energy crisis“. Natalia Fabra. Energy Economics, Volume 126, October 2023, 106963.

      The surge in gas prices due to the Ukrainian war has sparked a European energy crisis, triggering discussions about overhauling electricity markets. The European Commission (EC) proposes maintaining short-term electricity markets, fostering long-term Power Purchase Agreements (PPAs) and Contracts-for-Differences (CfDs), and permitting Member States to regulate retail prices during emergencies. This paper proposes a market design aligning with the EC’s plan while introducing additional elements to address its limitations. Notably, it advocates an enhanced reliance on CfDs tailored to the attributes of the generation technologies. This approach seeks to strike a balance by exposing technologies to short-term price signals while allocating investment risks efficiently.


        Sunspots That Matter: The Effect of Weather on Solar Technology Adoption. S. Lamp. Environmental and Resource Economics. Forthcoming.

        This paper tests for the presence of behavioral biases in household decisions to adopt solar photovoltaic (PV) installations using exogenous variation in weather. I find that residential technology uptake responds to exceptional weather, defined as deviations from the long-term mean, in line with the average time gap between decision-making and completion of the installation. In particular, a one standard deviation increase in sunshine hours during the purchase period leads to an approximate increase of 4.7% in weekly solar PV installations. This effect persists in aggregate data. I consider a range of potential mechanisms and find suggestive evidence for projection bias and salience as key drivers of my results.

        Energy Policy

        Learning from electricity markets: How to design a resilience strategy“. N. Fabra, M. Motta and M. Peitz. Energy Policy 168, 113116, 2022.

        We argue that private incentives are typically insufficient for an economy to be prepared for rare events with large negative impacts. Instead, it is preferable to put in place mechanisms that make sure that prevention, detection and mitigation measures are taken. The economics of electricity capacity mechanisms provides valuable lessons for the provision of essential goods in such events.


        (Mis)allocation of Renewable Energy Sources. S. Lamp, and M. Samano. Journal of the Association of Environmental and Resource Economists. Volume 10, number 1, January 2023.

        Policies to incentivize the adoption of renewable energy sources usually offer little flexibility to adapt to heterogeneous benefits across locations. In this paper, we evaluate the geographical misallocation of solar photovoltaic installations and their relation with the uniform nature of subsidies in Germany. 

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        Firms and Households during the Pandemic: What do we learn from their electricity consumption?” O. Bover, N. Fabra, S. García-Uribe, A. Lacuesta, and R. Ramos. Energy Journal. Forthcoming. EEL Working Paper 112

        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. Journal of Environmental Economics and Management 115, 102723.

        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. The impact is stronger among older males, smokers, individuals that were already on blood pressure medication, and individuals belonging to socially marginalized groups. Our estimates suggest that agricultural fires in India lead to hypertension-related additional mortality, associated with USD 9 billion annually in costs.


        Market Power and Price Exposure: Learning from Changes in Renewables Regulation” N. Fabra and Imelda. American Economic Journal: Economic Policy. Forthcoming. EEL Working Paper 105

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

        5.Economic Journal

        Auctions with Privately Known Capacities” N. Fabra, and G. Llobet. The Economic Journal. Volume 133 (651), 1106-1146. EEL Working Paper 100. [Replication Pakage]

        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.

        4.European Economic Review

        The implicit cost of carbon abatement during the COVID-19 pandemic” Natalia Fabra, Aitor Lacuesta, and Mateus Souza. European Economic Review 147 , 104165, 2022. EEL Working Paper 109 

        We provide estimates of the implicit cost of carbon abatement associated with the COVID-19 crisis. We compare that to the costs from renewable investments that would lead to similar abatement. Results suggest that power sector CO2 emissions fell by 4.13 Million Tons (about 11.5%) during 2020 due to the pandemic. There was also a substantial GDP loss in Spain, resulting in an implicit cost of carbon abatement exceeding 7 thousand Euro/Ton of CO2.  Investing in renewables to achieve similar carbon abatement would yield an implicit cost of 60-65 Euro/Ton of CO2.


        Technology-Neutral vs. Technology-Specific Procurement” Natalia Fabra and Juan Pablo Montero. The Economic Journal. volume 133 (650), 669-705, 2023. [Replication Package]

        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?

        MIT Working Paper


        Clean Energy Access: Gender Disparity, Health, and Labor Supply”, Imelda and Anjali P. Verma. The Economic Journal, volume 133 (650), 845-871, 2023.

        We investigate the implications 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.


        Storing Power: Market Structure Matters”, David Andrés-Cerezo and Natalia Fabra. Rand Journal of Economics, Volume 54, No. 1, 3-53, 2023

        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.

        2.Energy Economics

        Large-scale Battery Storage, Short-term Market Outcomes, and Arbitrage“, Stefan Lamp, and Mario Samano. Energy Economics, volume 107, 105786, 2022.

        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. Working paper.

        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.