Welcome! I am an Assistant Professor of Economics and Environmental Studies at Oberlin College. My research focuses on issues in energy and environmental economics, as well as industrial organization. I received my Ph.D. in Economics from the University of Michigan and my B.A. in Mathematics and Economics from Vassar College.
I have started a blog intended to highlight accessible work/challenges that I have enjoyed reading over the years.
- Brehm, Paul. "Natural gas prices, electric generation investment, and greenhouse gas emissions." Resource and Energy Economics 58 (2019): 101-116.
[ | Pre-Publication Version ]
Between 2007 and 2013 the natural gas price dramatically declined, in large part due to hydraulic fracturing. These lower natural gas prices induced switching from coal generation to natural gas generation. I find that switching caused 2013 carbon emissions to fall by 14,700 tons/hour. Lower gas prices also incentivized new investment in natural gas capacity. This less carbon-intensive capital stock led to an additional decrease of 2,100 tons/hour in 2013. Using three approaches, I estimate that 65-85% of new capacity was constructed because of lower gas prices. A social cost of carbon of $35/ton values the estimated total decrease in 2013 emissions at roughly $5.1 billion.
- "To Trade or not to Trade: Oil Leases, Information Asymmetry, and Coase"[ | Working Paper ]
(with Eric Lewis) (Revisions Requested, RAND Journal of Economics)
We exploit a government oil lease lottery to examine how well markets correct for initial misallocation. We find that in most cases, leases won by individuals have similar drilling outcomes to those won by oil and gas firms, suggesting that secondary markets efficiently correct for misallocation. However, a subset of leases is close to existing oil production where the nearby oil producing firm likely had inside information about expected productivity. We find that these leases are 50% less likely to be drilled when they are won by firms. We develop a model of information asymmetry that explains these results.
- "The Efficiency and Environmental Impacts of Market Organization: Evidence from the Texas Electricity Market"[ | Working Paper ]
(with Yiyuan Zhang)
This paper examines the effect of market organization on efficiency and emissions in wholesale electricity markets. Taking advantage of Texas' transition from a decentralized bilateral trading market to a centralized auction market, we find that information aggregation has a positive effect on market efficiency that dominates any change in market power incentives. Specifically, we show that in the nine months following the transition, high-cost generators are displaced by low-cost generators in production, leading to annual cost savings of ~$59 million relative to the counterfactual. Although the centralized market reduces generation costs, it also has an unintended effect on pollution emissions. For moderate marginal damage estimates, we find the increase in external costs of emissions completely offsets the productive efficiency gain.
Works in Progress
- "Airline Competition, Oil Price Pass-Through, and Carbon Taxes"[ ]
(with Anirudh Jayanti and Andrew Usher)
We study the pass-through of fuel costs to airline ticket prices. We find evidence of high pass-through rates that increase with competition, as well as significant heterogeneity across different products. Our findings are consistent with a model of price discrimination. Estimation of the parameters of this model allows us to isolate the effect of price discrimination on pass-through and characterize how this effect changes with competition. Because high oil prices function similarly to a carbon tax, we use our model to explore the implications of a carbon tax on the airline industry.
- "Drill, Baby, Drill: Resource Shocks and Fertility, Evidence from Indonesia"
(with Maggie Brehm)
- "Dutch Disease and Decentralization"
(with Traviss Cassidy)
University of Michigan:
- Principles of Economics  (Fall 2017, Spring 2018, Fall 2018, Spring 2019, Spring 2020)
- Environmental Economics  (Fall 2017, Fall 2018, Fall 2019)
- Energy Economics  (Spring 2018, Spring 2019, Fall 2019)
- Seminar in Energy and Environmental Economics  (Spring 2020)
- Graduate Student Instructor, Environmental and Resource Economics
- Graduate Student Instructor Mentor, Economics Department
(Fall 2014, Winter 2015, Fall 2015, Winter 2016)
- Head Graduate Student Instructor,Principles of Macroeconomics
(Fall 2013, Winter 2014, Fall 2014)
- Graduate Student Instructor, Principles of Macroeconomics
(Fall 2012, Winter 2013)
Honors and Awards
Rackham One-Term Dissertation Fellowship (Winter 2017) MITRE Graduate Research Award for "Airline Competition, Oil Price Pass-Through, and Carbon Taxes" (2016, $5,000) Outstanding Graduate Student Instructor Award (University-wide, 2015) Rackham Graduate Student Research Grant for "To Trade or not to Trade: Oil Leases, Information Asymmetry, and Coase" (2015, $3,000) Letters of Commendation for Excellent Teaching (Winter 2013, Fall 2013, Winter 2014)
- Summer Research Apprenticeship, Department of Economics, University of Michigan
- Verne G. Istock Scholar Award, University of Michigan (2011-2012)
- Emilie Louise Wells Fellowship, Vassar College (2011-2012)
- Phi Beta Kappa, Vassar College (2008)
- Research Analyst, The Brattle Group (2008-2011)