Elgar original reference
Edited by Rolf Wüstenhagen and Robert Wuebker
Chapter 16: Making, Breaking, and Remaking Markets: State Regulation, Entrepreneurship, and Photovoltaic Electricity in New Jersey
David M. Hart* 1 POLICY MAKERS AND ENTREPRENEURS RESPOND TO CLIMATE CHANGE: A NEW SOCIETAL ‘EXPERIMENT’ In a paper demonstrating that the carbon dioxide concentration of the atmosphere was rising as a result of fossil fuel combustion, Roger Revelle and Hans Suess (1957) stated that humanity was undertaking a ‘large-scale geophysical experiment’. More than 50 years later, the results of that experiment appear ominous, and humanity is beginning to undertake a large-scale societal experiment in response. This new experiment aims to catalyze a transformation in the use of energy, which we rely on nearly as much as the atmosphere itself. The ubiquity and necessity of energy use accounts for the extraordinary complexity and contentiousness of the new societal experiment. Tampering with the forms, availability, prices, and quantities of energy affects livelihoods, profits, and relationships. This complex web of interactions requires that any energy transformation be mediated primarily by markets. As Hayek (1945) articulated and the denouement of the Cold War demonstrated, only markets can effectively aggregate the manifold and diverse responses of individuals and firms to changing supply and demand conditions. Entrepreneurs must play a central part in the response to climate change as well, both in the Kirznerian sense of filling gaps within markets (Kirzner,1973) and in the Schumpeterian sense of creating technological and business innovations that open new markets and make new combinations possible (Schumpeter,1942). Yet, markets, old or new, will only work if they are embedded in a broader ‘soft’ infrastructure of law, public policy,...