- Apply fundamental microeconomic theories and models to analyze consumer and firm activity, policy, and regulation within contemporary energy markets.

- Identify the behavioral responses of consumers and firms to technological innovation and changes in the energy market design, and assess the resulting welfare implications.

- Analyze the sources, measurement, and consequences of market power within various segments of energy markets.

- Identify and critically assess sources of market failure specific to the environmental context of energy systems, and evaluate the effectiveness of policy tools designed to address them.

- Construct and interpret graphical and mathematical models of supply and demand curves relevant to energy markets. (k3, k4)

- Calculate market equilibrium prices and quantities, consumer surplus, and producer surplus in various energy market scenarios, including day-ahead markets. (k3)

- Explain why a competitive equilibrium might not exist and the consequences in energy markets. (k2)

- Discuss the role of elasticities for market outcomes. (k2)

- Analyze firm-level decisions regarding profit maximization and cost minimization, and use these principles to construct individual and aggregated supply curves for energy producers. (k4)

- Identify the characteristics and sources of market power in different segments of the energy industry (e.g., generation, transmission, retail, and specific technologies). (k2, k4)

- Analyze the economic consequences of monopolistic and oligopolistic market structures on pricing, output, and welfare in energy markets. (k4)

- Distinguish between public goods and private goods in energy systems, and explain the economic challenges associated with the provision of energy-related public goods (e.g., grid stability, energy security). (k2, k4)

- Describe and analyze the economic impact of positive and negative externalities arising from energy production and consumption (e.g., pollution, system benefits from distributed energy resources). (k2, k4)

- Critically assess the design and effectiveness of various policy tools, such as carbon pricing mechanisms (e.g., taxes, cap-and-trade systems), in internalizing environmental externalities in the energy sector. (k5)

- Compare and contrast the economic implications of locational marginal pricing (LMP) versus bidding zone approaches for electricity market efficiency, investment, and congestion management. (k4)

- Explain how specific changes in auction rules (e.g., bidding formats, market clearing mechanisms) can alter strategic bidding behavior and overall market outcomes in energy auctions. (k2)

- Discuss the economic trade-offs of different regulatory mechanisms (e.g., rate-of-return vs. incentive regulation) for natural monopolies like grid operators. (k1)

Core Microeconomic Principles:

- The concepts of supply and demand, including factors influencing shifts in curves and elasticity.

- Market equilibrium determination and its graphical and mathematical representation.

- Consumer theory

- Producer theory

- Concepts of consumer surplus and producer surplus, and their role in welfare analysis.

Market Structures and Market Power:

- Characteristics and outcomes of perfect competition in both the short run and the long run, as applied to energy generation and supply.

- The definition, sources (e.g., barriers to entry, concentration, network effects), and measurement (e.g., Lerner Index) of market power.

- Characteristics of monopoly, including pricing strategies, welfare implications (deadweight loss), and potential for price discrimination in energy infrastructure (e.g., transmission, distribution).

- Characteristics of oligopoly, including strategic interaction among firms, basic game theory concepts, and common models (e.g., Cournot, Bertrand) as they relate to energy markets.

Welfare Economics and Regulation:

- The concepts of Pareto efficiency and allocative efficiency.

- Economic arguments for and against deregulation in energy markets.

- The economic rationale for and types of regulatory tools used in energy markets to address market failures or control market power.

Market Failures and Environmental Economics:

- The definition and characteristics of public goods (non-rivalry, non-excludability) and the free-rider problem.

- The definition and economic impact of externalities (positive and negative).

- Carbon pricing mechanisms: the economic principles behind carbon taxes and cap-and-trade systems, and their effectiveness in mitigating climate change.

Specific Energy Market Design and Challenges:

- The operational mechanics and economic principles of Day-Ahead (DA) electricity markets.

- The concepts of locational marginal pricing (LMP) and bidding zones (or price zones), and their implications for market efficiency, congestion management, and investment signals.

- The economic rationale and design elements of capacity markets, and their intended and unintended effects on investment incentives.

- Fundamentals of auction theory as applied to energy market design, including how different auction formats (e.g., uniform-price, pay-as-bid) influence bidding behavior and market outcomes.