This chapter told the story of how the 2000 California energy shortage was aggravated by price deregulation.

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This chapter told the story of how the 2000 California energy shortage was aggravated by price deregulation. 

a. Suppose you are an entrepreneur who is interested in building a power plant to take advantage of the high prices for energy. Seeing rising energy costs, would price deregulation make it more or less likely you would build a new power plant? Why?

b. It’s very difficult to build and operate a new power plant, largely because new plants have to comply with a long list of environmental and safety regulations. Compared with a world with fewer such regulations, how do these rules change the average total cost of building and operating a power plant? Why?

c. Do these regulations make it more or less likely that you will build a new power plant? Why?

d. Do these regulations increase or decrease the market power of power plants that already exist?

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Modern Principles Of Economics

ISBN: 9781319245399

5th Edition

Authors: Tyler Cowen, Alex Tabarrok

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