Stephen W. Salant
Professor Stephen Salant is an applied microtheorist specializing in natural resource economics, environmental economics, and industrial organization.
In his natural resources and environmental research, Professor Salant generalized the standard model of exhaustible resources to take account of noncompetitive industry structures and, subsequently, to permit arbitrary spatial configurations of extractors and their customers. Professor Salant was also the first to formulate a model of speculative attacks. Although built to explain speculative attacks in commodity markets, his model was immediately adapted to explain speculative attacks in foreign exchange markets and has spawned a massive literature in international finance. He subsequently analyzed “oil rushes” and fishing derbies induced by total allowable catch quotas and showed that the same speculative attack mechanism underlies these phenomena.
His most recent contributions include several articles on common property extraction. Ongoing projects include: (1) an investigation of the “green paradox” hypothesis that the fossil fuel sector, even if competitive, will cut prices if alternative energy sources threaten its market share; and (2) an analysis of “delayed compliance” a key but unnoticed provision of all cap-and-trade programs to curb greenhouse gas emissions.
In his industrial organization research, Professor Salant initiated the literature on the profitability of horizontal mergers and on volume-restricting organizations such as cartels and fishery management councils that select quotas by voting. He has also written several articles on intertemporal price discrimination.
Professor Salant was the first co-editor of the Rand Journal of Economics and during its first decade co-organized the biennial Toulouse Conference on Environmental and Resource Economics. In addition to his faculty position at UM, he is a Nonresident Fellow of Resources for the Future and was a Senior Fellow of the University of California Center on Energy and Environmental Economics.