Cristián Hernández

I am a fifth year PhD student in the Department of Economics at the University of Wisconsin-Madison.

I will be available for interviews at the 2018 ASSA/AEA Annual Meetings in Philadelphia.

Research interests: Industrial Organization, Energy Economics, Applied Microeconomics.



Working Papers

Resource Misallocation in an Oligopoly Environment: Evidence from Texas' Electricity Industry (Job Market Paper)

Abstract: I evaluate the extent of resource misallocation and price distortions in Texas’ electricity market and test whether market power generates these inefficiencies. Electricity markets have a large potential for misallocation since there is imperfect competition and heterogeneous productivity across firms. Using a novel data set that combines plant level marginal costs, firm bid functions, and equilibrium prices, I construct a set of efficient outcomes and compare them to the observed output, total costs, and prices. Leveraging geographic bidding restrictions, I identify the degree of misallocation within firms and find that cost distortions are low. However, misallocation across firms is modest, and the auction mechanism increased total cost by 9 percent, or $160 million in 2009. I also find that hedge contract positions systematically depressed prices below efficient levels. Finally, the effect of exogenous shifters of market power on output distortions are consistent with model predictions, suggesting that the observed distortions are indeed generated by the exercise of market power.

On the Road to Recovery? Power Plant Closures and Neighborhood Well-Being (with Zack Barnett-Howell and Rachel Frattarola)

Abstract: Long term exposure to pollution and local disamenities from power plants has been shown to cause neighborhood decline through lower housing prices and socioeconomic status. It is unknown, however, whether neighborhoods recover after power plant retirements. We combine data on power plant attributes and locations across the Midwest with transactional housing price data to evaluate whether these areas recover following the closure of a nearby power plant. We use a difference-in-differences approach to estimate changes in housing prices following a plant closure. Our results suggest that the retirement of a power plant leads to an increase in local housing prices of approximately 4 percent with heterogeneity across power plant fuel type: 6 percent for gas, 3 percent for petroleum, and no effect for coal. These results are robust to an instrumental variables specification where we instrument for plant closures with plant age.

How Effective are Renewable Portfolio Standards at Reducing CO2 Emissions? (with Alexander Galetovic and Cristián Muñoz)

Work in Progress

Simple Inference in First Price Auctions (with Brandon Reeves)

Identification and Estimation in Asymmetric English Auctions with Unobserved Heterogeneity (with Amit Gandhi and Daniel Quint)

Coase and Market Power Dynamics: The Effect of the Initial Allocation of Water Rights on Investment in Chile's Electricity Industry

The Effect of Firm-Sponsored Training on Firm Productivity (with Siha Lee and Fu Tan)