Matthew Oliver
Associate Professor
- School of Economics
Overview
Matthew E. Oliver hails from Memphis, TN. He received his bachelor’s degree in Economics from the University of Memphis in 2008, and his PhD in Economics from the University of Wyoming in 2013. His primary fields of expertise are energy economics, environmental and natural resource economics, and industrial organization and regulation. Dr. Oliver’s research interests focus primarily on the regulation of energy resources and energy infrastructure. Much of his past work has dealt with natural gas markets and interstate pipelines. More recently, his research has focused on the market effects of rapid deployment of renewable energy technologies (e.g., wind and solar photovoltaics). Additionally, he has published (and ongoing) research on other topics such as the links between energy resource development, environment, and economic growth, and the economics of climate change. Since joining Georgia Tech in 2013, Dr. Oliver has taught various courses in energy and environmental economics, microeconomics, and macroeconomics.
- Ph.D., University of Wyoming
- B.A., University of Memphis
Interests
- Applied Econometrics
- Applied Microeconomics
- Energy Economics
- Environmental Economics
- Energy
- Environment
- International Development
- Infrastructure
Courses
- ECON-2105: Prin of Macroeconomics
- ECON-2106: Prin of Microeconomics
- ECON-3110: Adv Microeconomic Analys
- ECON-3300: Intl Energy Markets
- ECON-4170: Mathematical Economics
- ECON-4440: Economics of Environment
- ECON-6105: Macroeconomics
- ECON-6380: Economic of Environment
- ECON-7012: Microeconomic Theory I
- ECON-7102: Environmental Econ I
Publications
Selected Publications
Journal Articles
- Economies of Scale and Scope in Expansion of the U.S. Natural Gas Pipeline Network
In: Energy Economics [Peer Reviewed]
Date: November 2015
I analyze cost, capacity, mileage, and technical data for 254 U.S. natural gas pipeline projects over the period 1997–2012. Although project costs exhibit economies of scale over the capacity margin and economies of scope over the spatial margin, network expansion costs may not exhibit cost economies overall. That is, proportional increases in both transmission capacity and length (in miles) may result in a proportional (or even greater-than-proportional) increase in expansion costs. Moreover, large projects (high-capacity pipelines spanning long distances) likely require installation of compression horsepower, which has direct cost effects. My results suggest such projects exhibit significant diseconomies in cost structure. As a result, pipeline tariffs based on cost-of-service pricing likely present a disincentive for prospective pipeline customers to commit to long-term contracts—which are necessary for the pipeline to acquire regulatory permission to build—particularly for large, long-distance expansion projects. The implication is that cost-of-service pricing may inhibit network expansion, exacerbating congestion issues.
- Taming Drillers through Legislative Action: Evidence from Pennsylvania's Shale Gas Industry
In: Resource and Energy Economics [Peer Reviewed]
Date: November 2017
In 2012 Pennsylvania amended its Oil and Gas Act to tighten regulations on development of shale gas resources. Three key pecuniary provisions were annual well fees, increased bonding requirements, and higher penalty limits for violations. We analyze the effects of these mandates on well operator behavior using data on well operations and inspections over the period 2000-2013. After deriving theoretical predictions, we empirically examine each provision’s effect on firm behavior in two aspects: (i) acquisition of new well permits, and (ii) regulatory violations. Overall, we find the amendments induced firms to acquire fewer permits and elevate environmental protection effort.
- Pricing flexibility under rate-of-return regulation: Effects on network infrastructure investment
In: Economic Modelling [Peer Reviewed]
Date: May 2019
When a commodity market relies upon a regulated network service industry—e.g., telecommunications, electricity, or natural gas transmission—economic efficiency in that commodity market is a crucial consideration for regulatory design. This is because insufficient infrastructure investment relative to network demand results in congestion. The extraction of associated rents has distortionary effects on commodity spot market prices. Greater regulatory flexibility in network pricing can alleviate such issues by cultivating the incentives needed for stakeholders to invest in transmission capacity. To illustrate this effect I derive and numerically solve stylized optimality conditions for access and usage prices for a gas pipeline operator under alternative regulatory models. My results have general implications for regulation in network infrastructure industries, as energy and telecommunications markets are expected to expand considerably over the coming decades.
- Renewable generation capacity and wholesale electricity price variance
In: The Energy Journal [Peer Reviewed]
Date: September 2019
The share of electric power generated from renewable energy sources such as wind and solar must increase dramatically in the coming decades if greenhouse gas emissions are to be reduced to sustainable levels. An under-researched implication of such a transition in competitive wholesale electricity markets is that greater wind and solar generation capacity directly affects wholesale price variability. In theory, two counter-vailing forces should be at work. First, greater wind and solar generation capacity should reduce short-run variance in the wholesale electricity price due to a stochastic merit-order effect. However, increasing the generation capacity of these technologies may increase price variance due to an intermittency effect. Using an instrumental variables identification strategy to control for endogeneity, we find evidence that greater combined wind and solar generation capacity is associated with an increase in the quarterly variance of wholesale electricity prices. That is, the intermittency effect dominates the stochastic merit-order effect.
- Framework for assessment of the direct rebound effect for residential photovoltaic systems
In: Applied Energy [Peer Reviewed]
Date: October 2019
Over the past two decades the market for residential rooftop photovoltaic (PV) systems has grown substantially due mainly to declining costs—a trend that is expected to continue. One drawback of PV system diffusion is the potential for a rebound effect, a well-known economic response through which potential energy savings are partially offset by increased demand resulting from lower energy costs. Our work differs from the existing literature, however, because the rebound effect associated with the adoption of rooftop PV is due not to an improvement in energy efficiency, but to the availability of a zero-marginal cost alternative to grid electricity. This paper develops a novel method for estimating the rebound effect for rooftop PV based on economic and geographic information systems modeling. The method is illustrated through a numerical example, using neighborhood-level data from Fulton County, Georgia, USA. We discuss possible applications of our proposed method, which include (i) enhancing the predictive capability for conventional power grid managers in balancing forecasted demand with dispatchable supply, and (ii) aiding policy makers in designing policies to mitigate the rebound effect associated with solar PV adoption.
- Are energy endowed countries responsible for conditional convergence?
In: The Energy Journal [Peer Reviewed]
Date: May 2022
We test for economic convergence in GDP per capita and consumption per capita within two distinct sets of countries: those with significant (and plausibly exogenous) fossil fuel (FF) endowments and those without such endowments. Among countries with FF endowments, we find evidence of both absolute and conditional convergence across both macroeconomic dimensions, as indicated by standard β- and σ-convergence tests. By contrast, we do not find robust evidence of convergence among countries without FF endowments. This pattern—convergence among FF-endowed and non-convergence among non-endowed countries—is robust to changes in the sample period, controlling for potential resource curse effects, and is largely consistent across growth components. We discuss the implications for economic development and comment on its implications for global decarbonization policies.
- Trading One Waste for Another? Unintended Consequences of Fly Ash Reuse in the Indian Electric Power Sector
In: Energy Policy [Peer Reviewed]
Date: June 2022
In this paper, we examine the direct consequences of waste by-product reuse in a polluting industry, namely, India's coal-fired electric power sector, where ‘fly ash’ is legally required to be used as a substitute input in other industries. We first develop a simple theoretical model to gain insight and derive testable hypotheses applicable to our specific empirical setting. We provide empirical support for our model's predictions by exploiting plant-level variation in fly ash utilization. Results indicate greater reuse of fly ash per kWh of generation increases coal consumption per kWh, reduces the quality of coal used, and increases plant-level CO2 emissions per kWh. These results suggest the potential benefits of this policy—e.g., reduced waste disposal costs—may be offset by unanticipated increases in other external costs, particularly if not accompanied by supplementary regulation of other forms of pollution.
- Electricity Consumption Changes Following Solar Adoption: Testing for a Solar Rebound
In: Economic Inquiry [Peer Reviewed]
Date: January 2023
We use household level data to explore residential electricity use patterns following installation of solar panels. Solar adoption leads to an increase in total electricity consumption relative to a matched non-adopting control group. Our point estimate translates to a rebound effect of 28.5%, suggesting that nearly a third of the electricity produced by a customer’s solar panels is used for increased energy services, rather than reduced grid electricity consumption. We explore several potential drivers of an increase in electricity consumption. These results have important implications for electricity planning and policy, suggesting that rooftop solar stimulates additional demand for electricity.
All Publications
Journal Articles
- Tipping the scale: Why utility-scale solar avoids a solar rebound and what it means for U.S. solar policy
In: The Electricity Journal [Peer Reviewed]
Date: May 2023
Adoption of residential rooftop photovoltaic (PV) systems is increasingly widespread. However, empirical evidence shows that households who adopt rooftop PV increase total electricity consumption, a response known as the ‘solar rebound effect’ (SRE). The SRE implies that rooftop PV generation displaces conventional, grid-supplied electricity—still overwhelmingly generated by fossil fuel combustion—on a less than one-for-one basis. This article argues that utility-scale solar avoids a SRE because the SRE emerges as a household's response to the self-generation of electricity by its rooftop PV system, which changes its electricity consumption incentives in ways that utility-scale solar does not. By avoiding a SRE, utility-scale solar allows the carbon reduction potential of increased PV generation capacity to be more fully realized, which has important implications for U.S. solar policy.
- Electricity Consumption Changes Following Solar Adoption: Testing for a Solar Rebound
In: Economic Inquiry [Peer Reviewed]
Date: January 2023
We use household level data to explore residential electricity use patterns following installation of solar panels. Solar adoption leads to an increase in total electricity consumption relative to a matched non-adopting control group. Our point estimate translates to a rebound effect of 28.5%, suggesting that nearly a third of the electricity produced by a customer’s solar panels is used for increased energy services, rather than reduced grid electricity consumption. We explore several potential drivers of an increase in electricity consumption. These results have important implications for electricity planning and policy, suggesting that rooftop solar stimulates additional demand for electricity.
- Trading One Waste for Another? Unintended Consequences of Fly Ash Reuse in the Indian Electric Power Sector
In: Energy Policy [Peer Reviewed]
Date: June 2022
In this paper, we examine the direct consequences of waste by-product reuse in a polluting industry, namely, India's coal-fired electric power sector, where ‘fly ash’ is legally required to be used as a substitute input in other industries. We first develop a simple theoretical model to gain insight and derive testable hypotheses applicable to our specific empirical setting. We provide empirical support for our model's predictions by exploiting plant-level variation in fly ash utilization. Results indicate greater reuse of fly ash per kWh of generation increases coal consumption per kWh, reduces the quality of coal used, and increases plant-level CO2 emissions per kWh. These results suggest the potential benefits of this policy—e.g., reduced waste disposal costs—may be offset by unanticipated increases in other external costs, particularly if not accompanied by supplementary regulation of other forms of pollution.
- Are energy endowed countries responsible for conditional convergence?
In: The Energy Journal [Peer Reviewed]
Date: May 2022
We test for economic convergence in GDP per capita and consumption per capita within two distinct sets of countries: those with significant (and plausibly exogenous) fossil fuel (FF) endowments and those without such endowments. Among countries with FF endowments, we find evidence of both absolute and conditional convergence across both macroeconomic dimensions, as indicated by standard β- and σ-convergence tests. By contrast, we do not find robust evidence of convergence among countries without FF endowments. This pattern—convergence among FF-endowed and non-convergence among non-endowed countries—is robust to changes in the sample period, controlling for potential resource curse effects, and is largely consistent across growth components. We discuss the implications for economic development and comment on its implications for global decarbonization policies.
- Setting carbon taxes using declining discount rates: Implications for investment-based mitigation
In: Strategic Behavior and the Environment [Peer Reviewed]
Date: October 2020
The use of declining discount rates (DDR) to calculate the net present value of damages associated with climate change has important ramifications for climate policy. We examine the behavior of a firm subject to climate-based market interventions, specifically carbon taxes or abatement credits that are indexed to the social cost of carbon (SCC). Recognizing that private abatement investment decisions are financed via capital markets, we show that when the SCC is calculated using a DDR it is impossible for the policy maker to induce a level of investment today that is consistent with the SCC forecast for future periods. This leads to significant under-investment in abatement. We discuss the practical implications of this result for climate policy, with particular focus on climate policies designed to foster investment-based mitigation.
- Framework for assessment of the direct rebound effect for residential photovoltaic systems
In: Applied Energy [Peer Reviewed]
Date: October 2019
Over the past two decades the market for residential rooftop photovoltaic (PV) systems has grown substantially due mainly to declining costs—a trend that is expected to continue. One drawback of PV system diffusion is the potential for a rebound effect, a well-known economic response through which potential energy savings are partially offset by increased demand resulting from lower energy costs. Our work differs from the existing literature, however, because the rebound effect associated with the adoption of rooftop PV is due not to an improvement in energy efficiency, but to the availability of a zero-marginal cost alternative to grid electricity. This paper develops a novel method for estimating the rebound effect for rooftop PV based on economic and geographic information systems modeling. The method is illustrated through a numerical example, using neighborhood-level data from Fulton County, Georgia, USA. We discuss possible applications of our proposed method, which include (i) enhancing the predictive capability for conventional power grid managers in balancing forecasted demand with dispatchable supply, and (ii) aiding policy makers in designing policies to mitigate the rebound effect associated with solar PV adoption.
- Renewable generation capacity and wholesale electricity price variance
In: The Energy Journal [Peer Reviewed]
Date: September 2019
The share of electric power generated from renewable energy sources such as wind and solar must increase dramatically in the coming decades if greenhouse gas emissions are to be reduced to sustainable levels. An under-researched implication of such a transition in competitive wholesale electricity markets is that greater wind and solar generation capacity directly affects wholesale price variability. In theory, two counter-vailing forces should be at work. First, greater wind and solar generation capacity should reduce short-run variance in the wholesale electricity price due to a stochastic merit-order effect. However, increasing the generation capacity of these technologies may increase price variance due to an intermittency effect. Using an instrumental variables identification strategy to control for endogeneity, we find evidence that greater combined wind and solar generation capacity is associated with an increase in the quarterly variance of wholesale electricity prices. That is, the intermittency effect dominates the stochastic merit-order effect.
- Pricing flexibility under rate-of-return regulation: Effects on network infrastructure investment
In: Economic Modelling [Peer Reviewed]
Date: May 2019
When a commodity market relies upon a regulated network service industry—e.g., telecommunications, electricity, or natural gas transmission—economic efficiency in that commodity market is a crucial consideration for regulatory design. This is because insufficient infrastructure investment relative to network demand results in congestion. The extraction of associated rents has distortionary effects on commodity spot market prices. Greater regulatory flexibility in network pricing can alleviate such issues by cultivating the incentives needed for stakeholders to invest in transmission capacity. To illustrate this effect I derive and numerically solve stylized optimality conditions for access and usage prices for a gas pipeline operator under alternative regulatory models. My results have general implications for regulation in network infrastructure industries, as energy and telecommunications markets are expected to expand considerably over the coming decades.
- Natural Gas Pipeline Regulation in the United States: Past, Present, and Future
In: Foundations & Trends in Microeconomics [Peer Reviewed]
Date: June 2018
This monograph provides a detailed overview of federal-level regulation of the U.S. interstate natural gas pipeline industry. To develop a more complete understanding of the current regulatory environment, we place contemporary rules and regulations into their proper historical context by first reviewing the evolution of gas pipeline regulation over the course of the 20th Century. We then discuss the market restructuring process that culminated in 1992 with FERC Order No. 636, review the economic and policy research that studied its effects on pipeline operations (and on the U.S. natural gas market writ large), and examine the current regulations and industry structure that have since emerged. Finally, we explore possibilities for the future of regulation in the gas pipeline industry, offering some predictions regarding the likely direction of regulatory changes, paying particular attention to the possibility of incentive-based regulation in natural gas transmission.
- Reassessing the Links Between GHG Emissions, Economic Growth, and the UNFCCC: A Difference-in-Differences Approach
In: Sustainability [Peer Reviewed]
Date: February 2018
International climate agreements such as the Kyoto Protocol of 1997 and, more recently, the Paris Climate Agreement are fragile because, at a national level, political constituencies’ value systems may conflict with the goal of reducing greenhouse gas (GHG) emissions to sustainable levels. Proponents cite climate change as the most pressing challenge of our time, contending that international cooperation will play an essential role in addressing this challenge. Political opponents argue that the disproportionate requirements on developed nations to shoulder the financial burden will inhibit their economic growth. We find empirical evidence that both arguments are likely to be correct. We use standard regression techniques to analyze a multi-country dataset of GHG emissions, GDP per capita growth, and other factors. We estimate that after the Kyoto Protocol (KP) entered into force ‘Annex I’ countries reduced GHG emissions on average by roughly 1 million metric tons of CO2 equivalent (MTCO2e), relative to non-Annex I countries. However, our estimates reveal that these countries also experienced an average reduction in GDP per capita growth rates of around 1-2 percentage points relative to non-Annex I countries.
- Taming Drillers through Legislative Action: Evidence from Pennsylvania's Shale Gas Industry
In: Resource and Energy Economics [Peer Reviewed]
Date: November 2017
In 2012 Pennsylvania amended its Oil and Gas Act to tighten regulations on development of shale gas resources. Three key pecuniary provisions were annual well fees, increased bonding requirements, and higher penalty limits for violations. We analyze the effects of these mandates on well operator behavior using data on well operations and inspections over the period 2000-2013. After deriving theoretical predictions, we empirically examine each provision’s effect on firm behavior in two aspects: (i) acquisition of new well permits, and (ii) regulatory violations. Overall, we find the amendments induced firms to acquire fewer permits and elevate environmental protection effort.
- Economies of Scale and Scope in Expansion of the U.S. Natural Gas Pipeline Network
In: Energy Economics [Peer Reviewed]
Date: November 2015
I analyze cost, capacity, mileage, and technical data for 254 U.S. natural gas pipeline projects over the period 1997–2012. Although project costs exhibit economies of scale over the capacity margin and economies of scope over the spatial margin, network expansion costs may not exhibit cost economies overall. That is, proportional increases in both transmission capacity and length (in miles) may result in a proportional (or even greater-than-proportional) increase in expansion costs. Moreover, large projects (high-capacity pipelines spanning long distances) likely require installation of compression horsepower, which has direct cost effects. My results suggest such projects exhibit significant diseconomies in cost structure. As a result, pipeline tariffs based on cost-of-service pricing likely present a disincentive for prospective pipeline customers to commit to long-term contracts—which are necessary for the pipeline to acquire regulatory permission to build—particularly for large, long-distance expansion projects. The implication is that cost-of-service pricing may inhibit network expansion, exacerbating congestion issues.
- Contests, Common Agency, and Corruption: Why the Green Candidate Seldom Wins
In: Strategic Behavior and the Environment [Peer Reviewed]
Date: October 2015
Public sector corruption has been linked to resource dependency and environmental degradation in the developing world. Herein, we examine the persistence of public sector corruption by modeling an elected public official with the power to set agricultural/resource input-subsidization policy in a developing economy. Through common agency, firms offer bribes to influence policy. A more corrupt official extracts a greater bribe. This implies in a political contest between two candidates with different propensities for corruption, the corrupt incumbent, having the greater prize at stake, always expends greater effort and is the contest favorite. The less corrupt 'green' challenger is always the contest underdog. Our results suggest that i) corruption is politically advantageous; and ii) corruption and political instability are mutually reinforcing, leading to over-harvesting and too much pollution.
- Pipeline Congestion and Basis Differentials
In: Journal of Regulatory Economics [Peer Reviewed]
Date: September 2014
In the U.S., natural gas pipeline transport has undergone a wave of deregulatory actions over the past several decades. The underlying motive has been the presumption that removing regulatory frictions would facilitate spot price arbitrage, helping to integrate prices across geographic locations and improve efficiency. Yet certain frictions, specifically the effect of congestion on transportation costs, inhibit positive deregulatory impacts on efficiency. With the increase in domestic production and consumption of natural gas over the coming decades, upward pressure on the demand for transport will likely result in an increased occurrence of persistently congested pipeline routes. In this paper we explore the relationship between congestion and spot prices using a simple network model, paying particular attention to the influence of storage. We find that as congestion between two hubs increases, the scarcity value of transmission capacity rises, driving a wedge between spot prices. We empirically quantify this effect over a specific pipeline route in the Rocky Mountain region that closely resembles our structural design. Although our results paint a stark picture of the impact that congestion can have on efficiency, we also find evidence that the availability of storage mitigates the price effects of congestion through the intertemporal substitution of transmission services.
- General Equilibrium Ecosystem Modeling with Alternative Preference Specifications
In: Natural Resource Modeling [Peer Reviewed]
Date: May 2014
This paper reconciles two sets of literature with regard to the interactive ecological and economic impacts of invasive grass species and cattle stocking. We model cattle as optimal foragers, satiation foragers, and proportional foragers in order to understand the impact that each assumption imposes on predicted economic and ecological outcomes. Through this model sensitivity (as opposed to parameter sensitivity) analysis, we are able to identify three main drivers of plant invasions: exogenous forces such as climate change or nitrogen deposition, poor land management decisions, and a misalignment of incentives between cattle and ranchers even when ranchers behave optimally.
- Linking Zebra Mussel Invasion and Interstate Waterborne Commerce in the U.S.
In: Water Policy [Peer Reviewed]
Date: May 2014
The zebra mussel, a non-indigenous species in North American freshwater ecosystems, has received significant attention over the past two decades as a costly and damaging invader. In the USA, federal-, state-, and local-level policies designed to control and/or prevent the spread of this species remain flawed, in that they do not everywhere account for (or enforce regulations over) all potential anthropogenic dispersal pathways. Ballast water discharge is well-known as an important vector in the dispersal of aquatic invasive species in general, but for the zebra mussel its effects as a source of transmission have rarely been investigated. This article uses simple econometric techniques to measure the relationship between zebra mussel invasion in US states and domestic commercial navigation. Coefficient estimates suggest that incoming waterborne shipments from invaded states are an important determinant of the level of zebra mussel invasion in the receiving state. In designing a comprehensive framework for combating the spread of zebra mussels across US freshwater ecosystems, policy-makers may need to more carefully consider the monitoring and treatment of commercial ships' ballast water discharges as potentially effective strategies.
Chapters
- Pipelines
In: International Encyclopedia of Transportation
Date: 2021
- An overview of interstate gas pipeline regulation in the United States
In: Progress in Economics Research, Vol. 39
Date: 2017
- Climate policy coordination through institutional design: An experimental examination
In: Toward a New Climate Agreement: Conflict, Resolution, and Governance [Peer Reviewed]
Date: 2014