This paper explores the interaction between market power and the energy transition in the global upstream oil industry. To align with the Paris Agreement's global warming target, a significant portion of world oil reserves needs to remain untapped. At the same time, the cartel in the global crude oil market exercises market power by strategically slowing down production to inflate prices.  I build a dynamic structural model of global oil production during an energy transition where oil producers face a trade off between exercising market power (slowing down production), and avoiding unexploited reserves (speeding up production), relying on detailed micro-level data on global oil production costs and reserves.   My counterfactual analysis reveals that the welfare effects of environmental regulation are twofold: they can importantly erode strategic incentives and can prevent environmentally damaging production. My results suggest that phasing out oil in accordance with the Paris Agreement goals could reduce welfare loss from production misallocation in the market substantially, on top of the environmental welfare gains.

Presented at:

2024: EARIE* (Amsterdam), CRESSE* (Chania), EAERE* (Leuven),  EWI seminar* (Cologne), IFN Sustainable Energy Conference (Stockholm), Mannheim Energy and Environmental Conference (Mannheim), LSE Environment Camp (London), Belgian Environment Economist Day (Antwerp), IO seminar Leuven

2023: IO seminar Leuven, BSE energy seminar

How does market integration affect market efficiency? To address this question, I evaluate how production decisions in the Belgian electricity market change with exposure to foreign competition. I exploit the unique design of the European electricity market where firms experience exogenous variation in market integration - transmission congestion due to regulatory constraints - to causally estimate this effect. When international transmission lines are congested, (i) some gains from trade might be left on the table, and (ii) there is no threat of foreign competition at the margin. Relying on detailed data on the full characterization of Belgian electricity supply, my results indicate the substantial role of market integration in guaranteeing efficient electricity production. I find that a (temporary) market disintegration results in a 70% loss in gains from trade, and domestic productive inefficiencies are expected to increase by 65%  in the short run.

Presented at:

2023: EARIE (Rome), IIOC (Washington DC, Rising Star), IFN internal seminar (Stockholm), Belgian Environmental Economics Day (Brussels), Empirical Methods in Energy Economics Workshop (Yale)

2022: Mannheim Energy and Environmental Conference (Mannheim), BSE energy seminar (Barcelona), UGhent Economics Seminar (Ghent), ESIM Seminar (Leuven),