Environmental policy requires an analysis of the trade-offs between market and regulatory imperfections. On the one hand, market allocations are inefficient in the presence of imperfections such as externalities, market power, and informational asymmetries. On the other hand, government intervention to mitigate these imperfections is not costless, and can even make market performance worse. This course focuses on recent theoretical and empirical analysis of the costs and benefits of environmental and energy policies. Topics are likely to include: fuel economy standards and gasoline taxes, economic and health costs of pollution, emissions markets, wholesale and retail electricity markets, household energy behavior, and the relationship between the environment and economic development.