ABSTRACT
Public policy evolves in response to a number of forces, including public perceptions and special interest campaigns. Policy influences the basic conditions in the energy industry, in market structures, in corporate behavior, and in energy sector performance. Government intervention is often justified on the basis of market imperfections (market power and information problems), market failures (pollution), and income distributional concerns. It affects the performance of the energy sector through regulation, antitrust, environmental mandates, and other mechanisms.
