Grant McDermott bio photo

Grant McDermott

Assistant Professor
Dept. of Economics
University of Oregon

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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 consensus.” (Under review)

How much evidence would it take to convince sceptics that they are wrong about climate change? 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 tends to overwhelm all but the most extreme priors. Most sceptics form updated beliefs about climate sensitivity that correspond closely to estimates from the scientific literature. However, belief convergence is a non-linear function of prior strength. It becomes increasingly difficult to convince the remaining pool of sceptics that they are wrong. I discuss the necessary conditions for consensus formation under Bayesian learning and show how apparent deviations from the Bayesian ideal still be accommodated within the same conceptual framework. I argue that a generalized Bayesian model thus provides a bridge between competing theories of climate scepticism as a social phenomenon. (Paper. 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. (Paper.)

Selected works in progress

“The value of mass information: Search in the Google era.” With Christopher J. Costello and Michael B. Ward.

Publications

“Alternate explanations for the blue paradox do not withstand statistical scrutiny.” With Kyle C. Meng, Gavin G. McDonald and Christopher J. Costello. Published in Proceedings of the National Academy of Sciences, 115 (52), E12124–E12125, 2018. (Paper. Ungated. Code.)

“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, 116 (12), 5319–5325, 2019. (Paper. Ungated. Code. Blog post and media coverage.)

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

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

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

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

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. (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. (Report.)