Gail -

That three -spigot/bathtub analogy is so obviously flawed that I don't know why this person Nordhaus hasn't been called to task on it. (Or has he?)

Going back to the analogy, it hardly matters how many spigots you have going in and coming out of the bathtub. What really matters is i) who controls the individual spigots, and ii) where and to whom the outlet spigots are connected. This geopolitical reality makes the water in the bathtub nowhere close to being perfectly fungible, particularly if certain outlet spigots go not to he who pays the best price but rather to he who has made a long-term bilateral security arrangement with the controller of that spigot and has thus effectively taken a certain amount of bathtub water off 'the market'.

A far better analogy would be a game of musical chairs, as 'the market' does not determine who gets a chair and who doesn't, Rather, that is determined by who is more ruthless, opportunistic, and aggressive.

This is why I tend to dislike analogies, as there is rarely a perfect one-to-one correspondence of the elements of the analogy with the reality it is supposed to describe. Analogies can often be a cover-up for sloppy thinking.