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on Energy Economics |
| By: | Hawdon, David; Hunt, Lester; Levine, Paul L; Rickman, Neil |
| Abstract: | This paper examines optimal price (i.e. ‘sliding scale’) regulation of a monopoly when efficiency and managerial effort are not observed. We show how to operationalize this model of incentive regulation and use actual data from electricity distribution in England and Wales to make welfare comparisons of sliding scale regulation with a price cap regime and the First-Best (the full information case). Our method enables us to quantify technical uncertainty as faced by the electricity regulator in the 1990s and shows that there are significant welfare gains from a sliding scale relative to the price cap regime. |
| Keywords: | electricity distribution; regulation; sliding scale |
| JEL: | L51 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4934&r=ene |
| By: | Evens SALIES (GRJM) |
| Abstract: | The opening of the residential UK electricity sector in 1999 motivated several studies of its impact on both the level and structure of retail charges, and on incumbents’ market power. Using regional observations on tariffs offered in January 2004, the present paper supports previous results about the responses of simulated retail charges from actual tariffs to distribution and transmission costs, customers density, the length of low voltage underground circuit, and show new. We investigate whether vertically integrated suppliers have a particular effect on charges ceteris paribus the effect of cost drivers and other suppliers’ specific factors. |
| Keywords: | Pricing structure, Industrial Organization, Electricity Retail |
| JEL: | C1 C2 C3 C4 C5 C8 |
| Date: | 2005–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpem:0506001&r=ene |
| By: | Bruno José Marques Pinto (Graduate School of Economics at Fundacao Getulio Vargas - EPGE/FGV) |
| Abstract: | The paper examines the economic and regulatory factors that led to an explosion in the wholesale power prices, supply shortages, and utility insolvencies in California’s electricity sector. A necessary first step in determining the lessons learned from the California electricity crisis is a diagnosis of its causes. This requires a clear understanding of the federal and state regulatory infrastructure that governs the US electricity supply industry. The structure of California’s restructured electricity sector and its performance are discussed. The effects on wholesale market prices are analyzed. The regulatory responses leading to utility credit problems and supply shortages are also discussed. The paper concludes with a set of lessons from the California electricity crisis. |
| Keywords: | Electricity, eletricidade, regulation, regulação, California, deregulation |
| JEL: | L9 L5 L1 |
| Date: | 2005–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpio:0506003&r=ene |
| By: | Finn Roar Aune, Solveig Glomsrød, Lars Lindholt and Knut Einar Rosendahl (Statistics Norway) |
| Abstract: | High oil prices are favourable for OPEC in the short run, but may undermine its future revenues. We search for the optimal oil price level for the producer group, using a partial equilibrium model for the oil market. The model explicitly accounts for reserves, development and production in 4 field categories across 13 regions. Oil companies may invest in new field development or alternatively in improved oil recovery in the decline phase of fields in production. Non-OPEC production is profit-driven, whereas OPEC meets the residual call on OPEC oil at a pre-specified oil price, while maintaining a surplus capacity. According to our results, sustained high oil prices stimulate Non-OPEC production, but its remaining reserves gradually diminish despite new discoveries. Oil demand is only slightly affected by higher prices. Thus, OPEC is able to keep and eventually increase its current market share beyond 2010 even with oil prices around $30 per barrel (2000-$). In fact, an oil price around $40 seems to be profitable for OPEC, even if long-term revenues are not discounted. Sensitivity analyses show that even with many factors working jointly in OPEC's disfavour, the optimal oil price seems to be at least $25. Thus, for OPEC there is a trade-off between high prices and high market share in the short to medium term, but not in the long term. For OECD countries, on the other hand, there is a clear trade-off between low oil prices and low import dependence. |
| Keywords: | Oil market; oil price; market power; equilibrium model |
| JEL: | L13 Q31 Q41 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:416&r=ene |
| By: | Goriaev, Alexei; Sonin, Konstantin |
| Abstract: | The Yukos affair, a high-profile story of the state-led assault on a private Russian company, provides an excellent opportunity for an inquiry into the nature of company-specific political risks in emerging markets. News associated primarily with law enforcement agencies’ actions against company’s managers, not formally related to the company itself, caused significant negative abnormal returns for Yukos. The results are robust and not driven by a few major events, such as the arrests of Yukos’ top managers and shareholders. Stocks of less transparent private Russian companies have been more sensitive to Yukos-related events, especially employee-related charges by the law enforcement agencies. The situation was different for less transparent government-owned companies such as the world-largest natural gas producer Gazprom: they appear to be significantly less sensitive to these events. Actions of regulatory agencies have had predominantly industry-wide impact, whereas law-enforcement agencies’ actions affected shares of large private companies, especially those were privatized in the notorious loans-for-shares privatization auctions. |
| Keywords: | company specific political risk; event study; oil; privatization; Russian stock market |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5076&r=ene |
| By: | Gylfason, Thorvaldur |
| Abstract: | This Paper reviews the relationship between natural resource dependence and economic growth, and stresses how natural capital intensity tends to crowd out foreign capital, social capital, human capital, physical capital, and financial capital, thereby impeding economic growth across countries. Specifically, the Paper presents empirical cross-country evidence to the effect that nations that depend heavily on their natural resources tend to have (a) less trade and foreign investment, (b) more corruption, (c) less equality, (d) less political liberty, (e) less education, (f) less domestic investment, and (g) less financial depth than other nations that are less well endowed with, or less dependent on, natural resources. This matters for long-run growth because empirical evidence also suggests that trade, honesty, equality, liberty, education, investment, and financial maturity are all positively and significantly related to economic growth across countries. Before concluding, the Paper briefly compares and contrasts the experience of the OPEC countries with that of Norway, a singularly successful oil producer. |
| Keywords: | economic growth; natural resources |
| JEL: | O11 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4804&r=ene |
| By: | Sadek Boussena (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - http://www.upmf-grenoble.fr/lepii/ - CNRS : FRE2664 - Université Pierre Mendès-France - Grenoble II); Catherine Locatelli (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - http://www.upmf-grenoble.fr/lepii/ - CNRS : FRE2664 - Université Pierre Mendès-France - Grenoble II) |
| Abstract: | Les réformes des années quatre-vingt-dix, centrées sur de vastes programmes de privatisation, ont structuré l'industrie pétrolière russe autour de quelques grandes compagnies nationales et privées insérées dans un réseau de rapports de pouvoir complexes avec l'Etat fédéral et les Régions. Cette structure d'organisation incite à s'interroger sur les objectifs poursuivis par l'Etat concernant une industrie dite « stratégique ». |
| Keywords: | Russie, industrie pétrolière, accès aux ressources, droits de propriété, politique internationale |
| Date: | 2005–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00003940_v1&r=ene |
| By: | Buchner, Barbara; Carraro, Carlo |
| Abstract: | No international regime on climate change is going to be fully effective in controlling GHG emissions without the involvement of countries such as China, India, the United States, Australia, and possibly other developing countries. This highlights an unambiguous weakness of the Kyoto Protocol, where the aforementioned countries either have no binding emission targets or have decided not to comply with their targets. Therefore, when discussing possible post-Kyoto scenarios, it is crucial to prioritise participation incentives for all countries, especially those without explicit or with insufficient abatement targets. This paper offers a bottom-up game-theoretic perspective on participation incentives. Rather than focusing on issue linkage, transfers or burden sharing as tools to enhance the incentives to participate in a climate agreement, this paper aims at exploring whether a different policy approach could lead more countries to adopt effective climate control policies. This policy approach is explicitly bottom-up, namely it gives each country the freedom to sign agreements and deals, bilaterally or multilaterally, with other countries, without being constrained by any global protocol or convention. This study provides a game-theoretic assessment of this policy approach and then evaluates empirically the possible endogenous emergence of single or multiple climate coalitions. Welfare and technological consequences of different multiple bloc climate regimes will be assessed and their overall environmental effectiveness will be discussed. |
| Keywords: | agreements; climate; incentives; negotiations; policy |
| JEL: | C72 H23 Q25 Q28 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5034&r=ene |
| By: | Jan Larsson and Kjetil Telle (Statistics Norway) |
| Abstract: | The Integration Pollution and Prevention Control (IPPC) directive from the European Union implies that the regulatory emission caps should be set in accordance with each industry’s Best Available Techniques (BAT). The directive is under implementation in Norway, and it represents a refocus of the Norwegian environmental regulations away from economic efficiency towards a BAT principle. We examine the effect of this implementation with respect to expected emission reductions and increases in costs. Data Envelopment Analyses (DEA) is used to construct a frontier of all efficient plants. This provides us with two alternative interpretations of BAT. First, we assume that all the plants emit in accordance with the best practice technology, represented by the frontier, by reducing all inputs proportionally. Second, we assume that all plants emit in accordance with the best practice technology by reducing emissions only. Both interpretations reveal substantial potential for emission reductions. Further, abatement cost estimates indicate that considerable emission reductions can be achieved with low or no social costs, but that the implementation of BAT for all plants involves substantial costs. |
| Keywords: | IPPC; BAT; Emissions; Energy intensive industries; DEA; Technical efficiency; Frontier technology. |
| JEL: | D21 K23 K32 L61 L65 L73 Q48 R38 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:411&r=ene |
| By: | Taran Fæhn, Antonio G. Gómez-Plana and Snorre Kverndokk (Statistics Norway) |
| Abstract: | This paper addresses the frequently articulated worry for the unemployment impacts of abating CO2 emissions. The Spanish economy is ridden by unemployment rates well above the EU average. At the same time the deviation from EU's intermediate emission goals is more serious than for most other EU countries. We use a CGE model that includes a matching model with two types of labour, and which allows for different pricing rules and returns-to-scale assumptions. Our findings are optimistic. Due to low labour intensity in most of the dirty, Spanish industries, the unemployment rate is hardly affected by introducing an emission permit system. Further, by recycling the sales revenue into reduced labour taxes, unemployment rates fall. Contrary to other studies of Europe, we find that reducing payroll taxes on skilled labour is the most successful in reducing unemployment rates, both through increasing demand and through dampening the supply response to rising wages. All the recycling schemes also generate dividends in terms of welfare, but none offset the abatement costs entirely. |
| Keywords: | Spanish unemployment; Tax reform; Emission Permit Auctions; Employment dividend; Matching functions; Increasing returns to scale; Computable general equilibrium models. |
| JEL: | D58 J68 Q38 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:410&r=ene |
| By: | Georg Muller-Furstenberger (University of Bern); Martin Wagner (University of Bern); Benito Muller (Oxford Institute for Energy Studies) |
| Abstract: | The Carbon Kuznets hypothesis conjectures an inverse U{shape relation between GDP and carbon dioxide emissions. We investigate a number of empirical problems with this hypothesis by way of both econometric analysis and CGE modelling. The econometric analysis takes into account the possibility of unit root non{stationary regressors. On a panel of 107 countries covering the years from 1986 to 1998 we ¯nd evidence for unit root non{stationarity in log GDP and log emissions. Our discussion therefore focusses of potential pitfalls in estimating the Carbon Kuznets curve in the context of non{stationary panels context. We conclude that current practice in the literature fails to take these potential problems adequately into account. The second conceptual problem considered in the paper is the question of how to inter- pret an observed inverse U{shaped relationship. With the help of a small GCE model, we illustrate the danger of using observed GDP{emission patterns directly as a policy guide. Our model economy, where decarbonization is exogenous, demonstrates in particular that a carbon policy relating to income levels may not be appropriate even in the face of an observed inverse U{pattern between income and emissions. |
| Keywords: | Carbon Kuznets curve, non{stationary panel, regressions with integrated variables, CGE modelling |
| JEL: | Q20 C12 C13 |
| Date: | 2005–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpot:0506009&r=ene |
| By: | Rachel A. Bouvier |
| Abstract: | During the last decade, researchers have investigated the relationship between per capita income and environmental quality. This paper disaggregates the relationship between per capita income and emissions of carbon monoxide, carbon dioxide, sulfur dioxide, and volatile organic compounds into scale, composition and technology effects, using data from European and North American countries from the period 1980-1986. Results indicate that the scale effect outweighs the composition and technology effects in the cases of carbon dioxide and volatile organic compounds, while the opposite is true in the cases of carbon monoxide and sulfur dioxide. The results also suggest that greater democracy is associated with lower emissions of all four pollutants. |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:uma:periwp:wp84&r=ene |
| By: | James K. Boyce |
| Abstract: | Globalization – viewed as a process of economic integration that embraces governance as well as markets – could lead to worldwide convergence toward higher or lower environmental quality, or to environmental polarization in which the ‘greening’ of the global North is accompanied by the ‘browning’ of the global South. The outcome will not be dictated by an inexorable logic. Rather it will depend on how the opportunities created by globalization alter balances of power within countries and among them. |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:uma:periwp:wp78&r=ene |
| By: | Hiriart, Yolande; Martimort, David; Pouyet, Jérôme |
| Abstract: | When firms undertake activities which are environmentally risky, the divergence between social and private incentives to exert safety care requires public intervention. This control occurs both through ex ante regulation and ex post legal investigation. We delineate the respective scopes of those two kinds of monitoring when regulators and judges may not be benevolent. Separation between the ex ante and the ex post monitors of the firm helps to prevent capture. The likelihood of both ex ante and ex post inspections is higher under separation than under integration. This provides a rationale for the widespread institutional trend that has led to the separation of ex ante regulation from ex post prosecution. The robustness of this result is investigated in various extensions. Only when collusion is self-enforcing might it be possible that integration dominates separation. |
| Keywords: | environmental risk; exante and ex post investigations; integration and separation; liability; regulation |
| JEL: | L51 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4992&r=ene |