Regulation's Effect on Experimentation in Retail Electricity Markets

In this paper prepared for the Miller Upton Forum on the Wealth and Well-Being of Nations, Kiesling asks why in this digital age the basic technology supporting the production and distribution of electric power has changed so little since the industry’s birth in the early twentieth century. She points out that one of the fundamental advantages of polycentric orders is that they favor learning and innovation through continuous experimentation. Monocentric orders, on the other hand, tend to stifle innovation and experimentation. Kiesling argues that a monocentric regulatory paradigm — one that was ostensibly designed to make the electric power industry more efficient — has in fact created institutional barriers that have stymied technological growth in the industry.