If the motel industry runs more smoothly because motel room prices are free to fluctuate in response to changes in demand, why not let retail energy prices operate freely, too? Laboratory simulations of electricity markets support the economic intuition that market pricing would stabilize and lower energy prices.

Stephen J. Rassenti is a professor in the College of Arts and Science at George Mason University.
Vernon L. Smith is a member of Independent Institute’s Board of Advisors and Professor of Economics at Chapman University.
Bart J. Wilson is an associate professor of economics at George Mason University.
EconomyEnergyEnergy and the EnvironmentFree Market EconomicsHealth and HealthcarePublic Choice
Other Independent Review articles by Vernon L. Smith
Summer 2024 The Economic Function of Inflation Is to Lower the Real Value of Wealth Assets Sufficiently to Pay for the Government’s Excess Spending Monetized by the Federal Reserve
Summer 2023 Adam Smith, Sociality, and Classical Liberalism
Summer 2020 Classical Economics: Lost and Found
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