Re: Paul D. on this year's Nobel--especially V. Smith

[Sven R Larson <slarson@xxxxxxxxxxxx>]

Vernon Smith is right to some extent. The problem in California is
that the market was deregulated between utilities and retailers but
not between retailers and consumers. The latter market was price
capped while the former was not, so the market was bound for meltdown
once energy prices started climbing. So in that respect Vernon Smith
is right - if you are going to go market, you go market all the way.
The California solution combined the bad of a market with the worse of
government regulation, and the only reasonable solution is to either
adopt my suggested consumption hedge instrument as a feature of
full-scale deregulation or revert to government control from utility
to consumer.

/srl

paul davidson wrote:
>
> .  If Gary Mongovi still believes that Nobel prize winner Vernon Smith is a
> gift horse for heterodox views he should read Vernon Smith's op-ed Wall
> Street Journal piece in today's (October 16) issue -- where Smith argues
> that all the electrical energy problems in California are the result of
> government regulation and if there was only a free market in electrical
> energy the optimal result would occur.
>
> With gifts like that who needs suicide bombers?
>
> Paul

--
Dr. Sven R Larson
Department of Economics
Skidmore College
815, North Broadway
Saratoga Springs, NY 12866
(518) 580-5278