ARNOLD KLING
August 14, 2011
The Top Political Contributors
August 11, 2011
Gender and the New Commanding Heights
August 11, 2011
Jamie Galbraith Makes an Assumption
August 11, 2011
Macroeconometrics: The Science of Hubris
August 10, 2011
Real and Nominal Bond Yields
BRYAN CAPLAN
August 14, 2011
The Effect of Thumb Sucking on Income
August 12, 2011
The Voice of Cold, Hard Truth to All Would-Be Educators
August 12, 2011
Ability, Morality, and Prosperity: A Paper and a Report
August 11, 2011
The Theory of Time and Frittering
August 10, 2011
Male Variance and the Remnants of the Gender Gap
DAVID HENDERSON
August 9, 2011
Hayek in "Unbroken", Part Two
August 8, 2011
Hayek in "Unbroken"
August 5, 2011
James Bovard on the Peace Corps
August 4, 2011
Summers Way Off on FDR and 1941
August 3, 2011
The "Amazon" Tax
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Isn't that a bit harsh?
There is not a single market price for electricity and sunk capital costs in the fossil fuel market may give the question meaning.
Maybe he ought to have said that "by 2020 a new 1GW power station will be cheaper if it is solar" although even that could be finessed.
Also if the consequences you suggest actually occur could he not claim that solar energy was cheaper?
Assuming you are boht correct about cost curves, obviously no energy policy is necessary.
Interesting issue though.
This is very excessive nitpicking. Surely he is referring to the cost curves, or average production costs, not the marginal cost or, equivalently, the price.
And as long as we are in nitpick mode, electricity is hardly sold in a classic competitive market.
Ironically, if it were, we might see more rapid movement toward solar or other environmentally friendly sources. I would be willing to pay a small premium, say 5-10%, for electricity from a low-pollution source. If enough other people were willing to do the same incentives would encourage the development of new sources.
Alternatively, if the market functioned as it should, assigning the full social cost of producing and burning coal, say, to electricity users, the effect might be the same.
So perhaps it is not only some environmentalists who do not understand economics.
Obviously, an enlightened energy policy of the future will need to subsidize fossil fuel production to save jobs and promote conservation of the sun. At our rate of energy consumption, the sun will run out in a few billion years.
More seriously, and in line with previous comments, the full social cost of solar energy capture and battery storage will need to be factored in by regulators.
-Brad
"More seriously, and in line with previous comments, the full social cost of solar energy capture and battery storage will need to be factored in by regulators."
I agree that they need to factored in. If the market doesn't do it, as it doesn't with fossil fuels, then regulation might be desirable.