Electricity and the perils of second-best thinking – Paul Kerin

In an article in Wednesday’s Australian, Paul Kerin argues that our governments should focus on “first-best” environmental and energy policies to best serve the overall public interest. He warns that the negative consequences of second-best policy choices (such as the large-scale renewable energy target (LRET) and the maximum price cap (MPC) on wholesale electricity) are tempting governments to depart from “first-best” on others. Instead of making even more second-best policy choices (such as government procurement of generation capacity), our governments should focus on scrambling back up the slide towards first-best by replacing LRET with an emissions trading scheme and abolishing the MPC. The full version of Paul’s Australian article, is available here.

This entry was posted in Business economics, Economic reform, Economic regulation, Infrastructure, Paul Kerin, Public policy, South Australian economy. Bookmark the permalink.

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