COURSE NUMBER: MBA212.1

This course is cross-listed with the EWMBA Program.

COURSE TITLE: Energy and Environmental Markets

UNITS OF CREDIT: 3 units

INSTRUCTOR: Severin Borenstein and Catherine Wolfram

E-MAIL ADDRESS: borenste@haas.berkeley.edu; wolfram@haas.berkeley.edu

MEETING DAY(S)/TIME: Wednesdays 6:00-9:30pm

PREREQUISITE(S): Microeconomics (MBA201A) or its equivalent.

CLASS FORMAT: Classes will be a mixture of lectures and case discussions, with one or more presentations by leading energy executives and policy makers.

REQUIRED READINGS: The course will use the textbook, Economics of Regulation and Antitrust , 4^th edition, by Viscusi, Harrington and Vernon and a packet of readings and case materials.

BASIS FOR FINAL GRADE:

65% exams- 1 midterm and 1 final exam

35% energy strategy games – Game (1), The Electricity Strategy Game: teams acquire portfolios of electricity generating units and compete with them in a market that is representative of California; Game (2), The OPEC Game: teams act as country-level decision makers in the world oil market. Grading is based on team performance in these games and on explanations of strategies in written memos.

ABSTRACT OF COURSE'S CONTENT AND OBJECTIVES:

In the past 30 years, some of the largest industries have transitioned from regulated to market-based paradigms.  Managers in many transportation, information technology, and energy companies have had to devise strategies to cope with changes in economic and environmental regulations and the evolution of new markets and trading platforms.  The energy industries feature a complex mix of regulation and market-driven incentives.  Over the last decade, industries that had previously been viewed as staid and conservative have been rocked by deregulation initiatives, the California electricity crises, the Enron scandal, rising commodity prices, and now the challenge to reduce greenhouse gases

Drawing on the tools of economics and finance, we study the business and public policy issues that these changes have raised in energy markets. Topics include the development and effect of organized spot, futures, and derivative markets in energy; the political economy of deregulation; climate change, environmental policy and the emerging markets for green energy; market power and antitrust; and the transportation and storage of energy commodities. We examine the economic determinants of industry structure and evolution of competition among firms in these industries; investigate successful and unsuccessful strategies for entering new markets and competing in existing markets; and analyze the rationale for and effects of public policies in energy and environmental markets.

BIOGRAPHICAL SKETCHES:

Catherine Wolfram:

Catherine Wolfram is an associate professor of business administration at the Haas School of Business at UC Berkeley and Co-Director of the Energy Institute at Haas. She has taught core microeconomics to daytime and evening students and won the teaching award from the evening students in 2006 and 2008. Her research examines how firms’ market and regulatory environments affect strategies, and she has focused on the energy industries. For example, she has studied electricity industry privatization and restructuring around the world and, in recent work, she is evaluating the effects of policies designed to address climate change. She received a PhD in economics from MIT. Before joining the faculty at UC Berkeley, she was an assistant professor of economics at Harvard University.

Severin Borenstein:

Severin Borenstein is E.T. Grether Professor of Business Administration and Public Policy at the Haas School of Business and Co-Director of the Energy Institute at Haas. He received his A.B. from U.C. Berkeley in 1978 and Ph.D. in Economics from M.I.T. in 1983. His research focuses on business competition, strategy, and regulation. He has published extensively on the airline industry, the oil and gasoline industries, and electricity markets. His current research projects include the economics of renewable energy, equity and efficiency effects of electricity pricing, and competitive dynamics in the airline industry. Borenstein is also a research associate of the National Bureau of Economic Research in Cambridge, MA. He served on the Board of Governors of the California Power Exchange from 1997 to 2003. During 1999-2000, he served on the California Attorney General's Gasoline Price Task Force.