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Economics
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ASBESTOS AND INSURANCE: How to Facilitate a Settlement 
2005 No. 1 (Economics)
Even with the possibility of a legislative solution to asbestos mass tort actions, companies being sued and their insurance carriers continue to negotiate settlements, and to litigate coverage and bankruptcy actions. Ultimately, the goal of the parties is to achieve a satisfactory resolution rooted in the facts of the particular case and the realities of litigation risk. It is therefore necessary to understand the issues important to each side and to evaluate that information in a logical and clear framework. This structure allows for the realistic estimation of future asbestos claims and the appropriate allocation of potential damages to insurance coverage.
In this issue, we describe typical analyses and methodologies used in asbestos insurance settlement negotiations. In particular, we focus on methods used to forecast future asbestos-related claims and to allocate the liabilities to insurance coverage.
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DAMAGES: Estimating Product Liability
2004 No. 1 (Economics)
Access to reliable forecasts of product liability claims gives lawyers and corporate executives a critical lever with which to drive settlement and litigation strategies. Far too often, back-of-the-envelope estimates prove to be off the mark. Despite the fact that these cases often have accumulated huge amounts of scientific and claimant data, we find that few stakeholders typically use the available data to estimate potential damages.
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PATENT DAMAGES: Dynamic Models for Dynamic Markets
2003 No. 1 (Economics)
Economics is providing increasingly sophisticated tools to model the dynamic interactions of competitors. In the antitrust context, these types of models have found extensive use in the analysis of horizontal merger impacts. To date, such models have not found widespread application to the analysis of intellectual property infringement, even though the situations are analogous. A particularly powerful tool emerging from the field of economics is a dynamic model capable of predicting investment, pricing, and share results when competitors maximize profits over a long-term horizon. The Brattle Group has applied this model to the analysis of "but-for" browser share issues in the recently settled case of Netscape v. Microsoft. This powerful approach also has broad potential to analyze similarly complex dynamic issues in the context of intellectual property disputes.
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ECONOMICS AND PRICE FIXING: When the Price is Right
2000 No. 1 (Economics)
In this newsletter, we assess various methods for measuring market performance. Using examples based on our recent experience, we consider how these approaches have been used — and abused — in assessing whether elevated prices or margins constitute evidence of collusion or damages. In addition, we discuss briefly the importance of firm conduct in developing a complete liability argument in price-fixing cases.
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PATENT DAMAGES: The More Things Change
1999 No. 1 (Economics)
The estimation of damages in a patent infringement case attempts to place the plaintiff in the financial position it would have enjoyed absent the violation. In practice, however, various approaches that purport to share the same goal sometimes give very different answers. What drives these differences, and which approach should be used in any particular set of circumstances? Are divergent estimates largely a result of advocacy, or do they reflect genuine differences of opinion between economic experts?
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ECONOMIC DAMAGES: Behind Every Great Fortune
1998 No. 1 (Economics)
This article derives from observations and experience in litigation concerning damage claims. A common issue in such cases is the measure of damages from a lost opportunity. Although simple in concept, the correct estimation of damages is often difficult in practice. Two of the most common mistakes are the improper consideration of mitigation opportunities and the improper assessment of market evidence. Many of the largest and most discussed damage estimates result from these fundamental mistakes. Any affirmative analysis must avoid these errors because they can be easily exposed. Conversely, the failure to rebut such errors can be an equally serious mistake.
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Energy
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Reviving Integrated Resource Planning for Electric Utilities: New Challenges and Innovative Approaches
2008 No. 1 (Energy)
In this issue of ENERGY, we look at how changes in the power industry are affecting integrated resource planning (IRP). Fundamental changes in fuel markets, capital costs, and new environmental concerns have upset utility resource planning, creating much more uncertainty than traditional IRP can accommodate. In this new environment, a different approach is necessary.
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Independent System Operators for EU Energy Markets
2007 Issue 1 (Energy)
This newsletter looks at the use of Independent System Operators (ISOs) to address conflict of interest concerns in the EU energy sector. Proposals for an ISO solution can arise in both regulatory and competition proceedings. This issue should therefore be of interest to utility executives, regulators, competition lawyers
and others working in the sector.
The Brattle Group regularly advises on ISO issues in the U.S. and has been involved in existing ISO arrangements in Europe.
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WHEN SPARKS FLY: Economic Issues in Complex Energy Contract Litigation
2006 No. 2 (Energy)
Complex commercial litigation in the energy industries is increasing. This is due to formerly regulated markets being restructured, market participants increasingly relying on wholesale power markets, and both fuel and power markets experiencing significant increases in prices and volatility.
The Brattle Group has extensive experience in estimating damages and supporting commercial litigation in the energy sector, as well as a wide variety of other industries. Our experts are intimately familiar with the unique characteristics of energy markets and common practices, and they frequently support both the liability and damages phases of litigation matters.
In this issue of ENERGY, we share some of our experience and insights into best practices for estimating damages in energy contract litigation.
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MODELING POWER MARKETS: Uses and Abuses of Locational Market Simulation Models
2006 No. 1 (Energy)
Locational power market simulation models are becoming a widely-used tool for market analysis and asset valuation in regions that have implemented locational marginal pricing (LMP). However, such models are difficult to run well, and there is much debate about their ability to simulate real-world operations accurately or to provide meaningful forecasts.
The Brattle Group has extensive expertise in using locational power market simulation models in a wide variety of applications. In this issue of ENERGY, we share some of our insights into the best practices for using these models effectively.
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ENERGY AMBITIONS: Can Wind Work in an LMP Market?
2005 No. 1 (Energy)
This edition of ENERGY discusses the confluence of two current trends in electricity markets - the move to locational marginal pricing (LMP) and the increasing role of renewables as a resource. Although the pace of electricity market restructuring has slowed, it continues nonetheless with, for example, California slated to move to LMP in 2007. In addition, renewable portfolio standards (RPS) have been implemented by many states, with more in the midst of considering their adoption. Hence, the interaction between renewables and LMP markets will become an increasingly important area for policy makers. We discuss some of the key issues here.
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FERC's Standard Market Design — Notice of Proposed Rulemaking (NOPR)
2002 No. 2 (Energy)
This edition of ENERGY reports on a significant and controversial new proposed rule issued this summer by the U.S. Federal Energy Regulatory Commission (FERC). If implemented, this rule would greatly accelerate the evolution to competitive wholesale power markets and substantially change the nature of transmission service in much of the country. The proposed rule also would implement a standard market design for generation and transmission service throughout the U.S. This article summarizes the proposed rule and identifies potentially difficult and contentious implementation issues and other ramifications for industry participants.
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Market Pricing — The Valuation of Transmission Rights
2002 No. 1 (Energy)
This edition of ENERGY presents a framework for the valuation of transmission rights in deregulated electric power markets. This includes rights that arise from physical investments in merchant transmission assets as well as financial investments in transmission rights and congestion contracts. Instead of having a specified return, as under cost-of-service regulation, the value of these investments depends upon the market price for energy, capacity, and ancillary services in addition to the expected physical usage of the underlying transmission assets. Standard methods for the evaluation of utility investments may yield misleading results and lead to value-diminishing decisions. Option-pricing and decision-analysis methods can provide more accurate assessments of value, aid in the choice among alternative project configurations, or help in the determination of the timing of a project.
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The California Crisis and its Lessons for the EU
2001 Special Edition (Energy)
When California's market opened to competition in 1998, proponents of deregulation expected that it would bring about rate reductions of up to 30%. Instead, rates remained stable for the first two years following deregulation, and then began to rise dramatically. Over the past year, wholesale electricity prices have significantly exceeded historical levels, customers have experienced rolling blackouts, and power companies have suffered serious financial losses.
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Energy Markets: Liberalization of European Gas Markets
2000 No. 3 (Energy)
This edition of ENERGY describes the current structure of European natural gas markets and the impact of the EU's new Gas Directive on transmission access. It outlines The Brattle Group's recommendations to the European Commission for the implementation of the directive and the creation of a competitive European market in natural gas.
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Energy Markets: A Time for A Broader Perspective
2000 Special Edition (Energy)
With the nation's attention focused on energy, there is a danger that rising prices in electricity, natural gas, and heating oil will combine with presidential politics to produce a series of misguided initiatives that would serve only to exacerbate the problem. There are, however, moves that could improve matters both now and for the future. This issue of ENERGY explains how oil, natural gas, and electricity are intertwined in a fashion likely to extend high energy prices into next winter. These relationships are not widely understood, but they are important to creating measured energy and environmental policy responses that will ensure both the cleanliness of our environment and the health of our energy markets and economy.
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Electricity Markets: The Price of Power
2000 No. 1 (Energy)
This issue reports on two cases dealing with the assessment of the extent of market power and potential for future exercise of market power in domestic and international electricity markets. Several techniques are used to measure market power, including concentration indices and market simulation models. This article discusses the uses of these techniques and their application to two real-world markets.
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Environment
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ENVIRONMENTAL & PRODUCT LIABILITY DISCLOSURE: Brattle Survey Shows an Array of Inconsistent Practices
2006 No. 1 (Environment)
Since the passage of the Sarbanes-Oxley Act in 2002, companies have been paying more attention to the disclosure of environmental and product liability matters. However, the debate continues regarding the scope of disclosure and the necessity of formal SEC rule revisions.
After more than a decade of engaging in cases involving environmental and product liability estimation and disclosure, The Brattle Group sponsored a web-based survey to benchmark the current attitudes, practices, challenges, and trends relating to this area. This newsletter summarizes the results of the survey, focusing on the extent to which companies disclose liabilities, define what is “material,” and are aware of recent and proposed changes in disclosure standards, guidance, and procedures.
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LITIGATION STRATEGY: Back in Vogue
2005 No. 1 (Environment)
For years, strategic thinking was pushed as a way to maximize revenues and minimize losses. Then the trend of downsizing and minimizing legal expenditures put investment in strategic thinking on hold, and a minimal “shoot from the hip” attitude toward litigation became more common.
Strategic thinking is now making a comeback because investment in understanding the big-picture has proven valuable to the bottom line. This newsletter provides case studies to show where early development of strategies determined the value of various environmental litigation matters.
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TOXIC TORTS: The Science of Estimating Damages
2002 No. 1 (Environment)
Many companies face uncertain yet substantial costs from toxic tort claims. Estimating these costs in a more rigorous, less "seat-of-the-pants" fashion using economics and statistics can give companies and their counsel information necessary to manage risk and plan for the future. Estimates may also be useful in situations where agencies contemplate administration of a national arbitration and award plan, or for certain bankruptcy proceedings. This issue of ENVIRONMENT presents quantitative methodologies for preparing reliable damages estimates for toxic torts and explains some of the complexities associated with such estimates. Case studies are presented for an asbestos claims assessment and a contaminated well field claim.
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