Research

This is a personal website. The research, views, findings, and opinions are my own, not my employer's.

Working Papers

Rate of Return Regulation Revisited

Coauthor: Stephen Jarvis

Abstract: Utility companies recover their capital costs through regulator-approved rates of return. Using a comprehensive database of utility rate cases, we find a significant premium for regulated returns on equity relative to several capital cost benchmarks. We show that firms decide strategically when to initiate new rate cases, such that regulated returns respond more quickly to increases in underlying capital cost benchmarks than to decreases. Higher regulated returns incentivize utilities to own more capital: a one percentage point rise in return on equity increases capital assets by 3–4%. Overall we find excess costs to US consumers averaging $7 billion per year.

Completed Papers

Information Matters: Feasible Policies for Reducing Methane Emissions

Ungated link, Appendix, Replication code

Coauthor: Wenfeng Qiu

Abstract: Oil and gas wells emit methane, a potent greenhouse gas. Emissions are minimally regulated, leading to a large climate externality. We explore how technologies can enhance welfare gains from regulatory policies by providing policymakers with more information. We focus on audit policies with realistic constraints, such as limited audit budgets and caps on fees. We develop a model of emission abatement, estimate the abatement costs using cross-sectional data from scientific studies, and simulate welfare gains from policies with varying levels of information availability. We show targeting substantially improves the effectiveness of policies. In particular, a policy that audits 1 percent of wells with uniform probability achieves 0.3% of the gains of the infeasible first best, while targeting audits using remotely sensed emissions can achieve 16% of the first best, even with moderate fee levels.

Bibtex citation. 
@article{DunkleWerner/Qiu:2025,
  title = {Information Matters: Feasible Policies for Reducing Methane Emissions},
  ISSN = {2333-5963},
  doi = {10.1086/732913},
  journal = {Journal of the Association of Environmental and Resource Economists},
  publisher = {University of Chicago Press},
  author = {Dunkle Werner, Karl and Qiu, Wenfeng},
  year = {2025},
  pubstate = {forthcoming}  
}