Grant McDermott bio photo

Grant McDermott

Assistant Professor
Dept. of Economics
University of Oregon

Email Twitter LinkedIn   Scholar   ORCID GitHub

Research

Fields: Environmental and natural resource economics. Applied econometrics and data science. Uncertainty and Bayesian learning.

Interests: Energy markets and climate change. Water management. Fisheries policy. The impact of environmental quality on market outcomes.

Working papers

“Sceptic priors and climate policy.”

How much evidence would it take to convince climate sceptics that they are wrong about global warming? I explore this question within a Bayesian framework. I consider a group of stylised sceptics and examine how these individuals update their beliefs in the face of current and continuing climate change. I find that available evidence in the form of instrumental climate data already tends to overwhelm all but the most extreme priors. The resulting posterior distributions of climate sensitivity correspond closely to existing estimates from the scientific literature. The updated beliefs of most sceptics are thus consistent with a carbon price that is substantially greater than zero. However, belief convergence is a non-linear function of prior strength, so that it become increasingly difficult to convince the marginal sceptic. I conclude by discussing the general conditions for consensus formation under Bayesian learning, its relevance to our current policy impasse, and offer some remarks about finding common ground in the future. (Link to paper. Link to code.)

“Hydro power. Market might.”

A central tenet of economic theory is that market power induces deadweight loss. This claim rests on an assumption that is difficult to verify empirically. Namely, dominant firms produce less than the social optimum. I provide evidence of such restrictive behaviour using a rich dataset of Norwegian hydropower firms. The research design exploits exogenous variation in the formation of localized electricity markets. Power plants are assigned to distinct sub-markets as the result of binding transmission constraints. This manifests as a shock to the market power that parent firms command in each sub-market. Further, the ubiquity of hydropower generation in Norway avoids empirical complications associated with marginal cost estimation and endogenous variation in the supply mix. This allows me to identify the causal impact of market power on firm behaviour without imposing strong structural assumptions on the data. I show that a one percent increase in market power causes firms to withhold production by as much as a 0.3 percent. My results suggest that even seemingly competitive markets are susceptible to manipulation and welfare losses. (New version available soon.)

Selected works in progress

“The value of bulk information in the age of search engines.” With Christopher J. Costello and Michael B. Ward.

Publications

“The Blue Paradox: Preemptive Overfishing in Marine Reserves.” With Kyle C. Meng, Gavin G. McDonald and Christopher J. Costello. Published in Proceedings of the National Academy of Sciences. (Link to paper. Link to code.)

“Protecting marine mammals, turtles and birds by rebuilding global fisheries.” With Matthew G. Burgess and others. Published in Science, 359 (6381) 1255–31258, 2018. (Link to paper. Link to code. Blog post and media coverage here.)

“Five rules for pragmatic blue growth.” With Matthew G. Burgess and others. Published in Marine Policy, 87 (2018) 331–339, 2018. (Link to paper.)

“Resolving disputes over ocean calamities.” With Matthew G. Burgess. Published in BioScience, 65(12), 1115-1116, 2015. (Link to paper.)

“Electricity prices, river temperatures and cooling water scarcity.” With Øivind A. Nilsen. Published in Land Economics, 90(1), 131-148, 2014. (Link to paper. Ungated version here. Blog post and media coverage here.)

Report chapters

“South Africa Compliance Analysis.” With James Morrissey and Davina Mendelsohn, in “Governing Global Climate Change: St Petersburg Compliance Report for the ‘G8 Plus Five’ Countries”, Maria Banda and Joanna Langille (eds.), G8 Final Compliance Report 2007, Oxford: G8 Research Group Oxford, 1 June 2007. xiii + 190 pp. (Link to report.)

“The Current Status of the EPWP (Infrastructure) in the Western Cape.” With Anna McCord, Kim Adonis and Lisa van Dongen. Prepared for the Western Cape Provincial Treasury & Department of Transport And Public Works CAPE. Public Works Research Project, SALDRU, UCT, 24 March 2006. (Link to report.)