nep-ene New Economics Papers
on Energy Economics
Issue of 2010‒02‒05
twenty papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao, Spain

  1. The Economic Effects of Electricity Deregulation: An Empricial Analysis of Indian States By Sen, A.; Jamasb, T.
  2. The power of weather By Christian Huurman Francesco Ravazzolo; Chen Zhou
  3. On the sustainability of collusion in Bertrand supergames with discrete pricing and nonlinear demand By Zimmerman, Paul R.
  4. Crucial relationship among energy commodity prices By Cristina Bencivenga; Giulia Sargenti
  5. The competitive impact of hypermarket retailers on gasoline prices By Zimmerman, Paul R.
  6. Are oil price forecasters finally right? Regressive expectations toward more fundamental values of the oil price By Reitz, Stefan; Rülke, Jan C.; Stadtmann, Georg
  7. The level crossing analysis of German stock market index (DAX) and daily oil price time series By F. Shayeganfar; M. Holling; J. Peinke; M. Reza Rahimi Tabar
  8. Energieeffizienz in der Produktion: Wunsch oder Wirklichkeit? Energieeinsparpotenziale und Verbreitungsgrad energieeffizienter Techniken By Schröter, Marcus; Weißfloch, Ute; Buschak, Daniela
  9. The pungent smell of “Red Herrings” Subsoil assets, rents, volatility and the resource curse By Frederick van der Ploeg; Steven Poelhekke
  10. Resource Wealth, Innovation and Growth in the Global Economy By Pietro F. Peretto; simone Valente
  11. Cuba: A Country Profile on Sustainable Energy Development By International Atomic Energy Agency IAEA
  12. High-Speed Inter-City Transport System in Japan Past, Present and the Future By Katsuhiro Yamaguchi
  13. Emissions Trends, Labour Productivity Dynamics and Time-Related Events - Sector Heterogeneous Analyses of Decoupling/Recoupling on a 1990-2006 NAMEA By Marin, Giovanni; Mazzanti, Massimiliano
  14. The Choice of Policy Instruments to Control Pollution under Costly Enforcement and Incomplete Information. By Carlos Chávez; Mauricio Villena; Johan Stranlund
  15. The Economics of Adaptation to Extreme Weather Events in Developing Countries By Brian Blankespoor; Susmita Dasgupta; Benoit Laplante; David Wheeler
  16. Rent seekers in rentier states: When greed brings peace By K. Bjorvatn; A. Naghavi
  17. Assessing the impact of infrastructure quality on firm productivity in Africa : cross-country comparisons based on investment climate surveys from 1999 to 2005 By Escribano, Alvaro; Guasch, J. Luis; Pena, Jorge
  18. Industrial Policy and Environmental Sustainability: The Challange After COP15 By Naude, Wim.; Alcorta, Ludovico.
  19. Do we believe in climate change? A multi-agent climate-economic model By Sylvie Geisendorf
  20. It’s One Climate Policy World Out There—Almost By Nancy Birdsall; Jan von der Goltz

  1. By: Sen, A.; Jamasb, T.
    Abstract: As developing countries seek to improve their economic prospects, electricity reform has been widely viewed as a central part of this effort.While the focus of most research to date has been at economy or utility level; there has been much less research on regional outcomes. India presents a unique case, as its states share a common economic and political system, whilst having been given considerable flexibility in how they implement reform, thus allowing a comparative analysis of alternative approaches. This study contributes through an econometric analysis of the determinants and impact of electricity reform in India, giving special regard to its political economy and regional diversity. It assesses how electricity reform in India has affected key economic variables that determine sectoral efficiency, prices and investment flows. We use panel data for 19 states, spanning 1991-2007, using dynamic panel data estimators. Results show that individual reform measures have affected key economic variables differently; thus the nature of reform in individual states would determine these economic outcomes. Findings suggest that due to political economy factors influencing reform, outcomes have tended to be adverse in the initial stages, as previously hidden distortions become apparent. The performance of reforms, however, may improve as it progresses beyond a ‘baseline’ level.
    Keywords: Electricity, India, reform, deregulation, regional impacts
    JEL: O1 Q4 R1 L2
    Date: 2010–01–22
  2. By: Christian Huurman Francesco Ravazzolo; Chen Zhou
    Abstract: This paper examines the predictive power of weather for electricity prices in day- ahead markets in real time. We ¯nd that next-day weather forecasts improve the forecast accuracy of Scandinavian day-ahead electricity prices substantially in terms of point forecasts, suggesting that weather forecasts can price the weather premium. This improvement strengthens the con¯dence in the forecasting model, which results in high center-mass predictive densities. In density forecast, such a predictive density may not accommodate forecasting uncertainty well. Our density forecast analysis con¯rms this intuition by showing that incorporating weather forecasts in density forecasting does not deliver better density forecast performances.
    Keywords: Electricity prices; weather forecasts; point and density forecasts; GARCH models.
    Date: 2010–01
  3. By: Zimmerman, Paul R.
    Abstract: In traditional industrial organization models of Bertrand supergames, the critical discount factor governing the sustainability of collusion is independent of key demand and supply parameters. Recent research has demonstrated that these counterintuitive results stem from the assumption that firms can change prices in infinitesimally small increments (i.e., continuously). This note considers the effects of demand curvature in the context of a model of collusion where, as in Gallice (2008), Bertrand competitors can deviate only by lowering prices by some small, discrete amount. Two alternative demand specifications that capture the influence of demand curvature are considered. In either case, it is shown that with discrete price changes the critical discount factor is determined by the key demand parameters, including demand curvature. However, the direct effects of increased concavity (or convexity) in market demand on the sustainability of collusion runs in opposite directions across the two models. This discrepancy is shown to arise from the way in which the respective demand curves rotate in response to a change in the demand curvature parameter. The results support the conclusion of earlier research that determining the potential for collusion in homogenous goods industries likely requires careful case-by-case investigation.
    Keywords: Bertrand supergames; cartels; collusion sustainability; discrete pricing; nonlinear demand
    JEL: L13 L41
    Date: 2010–01–25
  4. By: Cristina Bencivenga; Giulia Sargenti (Department of Economic Theory and Quantitative Methods for Political Choices,Sapienza University of Rome,)
    Abstract: This study investigates the short and long run relationship between crude oil, natural gas and electricity prices in US and in European commodity markets. The relationship between energy commodities may have several implications for the pricing of derivative products and for risk management purposes. Using daily price data over the period 2001-2009 we perform a correlation analysis to study the short run relationship, while the long run relationship is analyzed using a cointegration framework. The results show an erratic relationship in the short run while in the long run an equilibrium may be identi ed having di erent features for the European and the US markets.
    Keywords: Energy, commodities, prices.
    Date: 2010
  5. By: Zimmerman, Paul R.
    Abstract: Hypermarkets are large retail suppliers of general merchandise or grocery items that also sell gasoline, often at very low margins. Using panel data for 1998-2002, this paper estimates the impact of hypermarkets on average state-level retail gasoline prices. The empirical results suggest a robust, economically (and statistically) significant effect of increased competition from hypermarkets. Furthermore, the results also suggest that refiners’ lower the delivered wholesale prices charged to their affiliated lessee-dealer and open-dealer stations in response to increased hypermarket competition, which in turn translates to lower retail (street) prices. The presence of a state motor fuel sales-below-cost (SBC) law may lessen the price-reducing effects from hypermarket competition by 40-67 percent while independently imparting no other offsetting price reductions. Finally, using recently published estimates of the short-run own price elasticity of demand for gasoline, consumer welfare is estimated to have increased in the neighborhood of $488 million over the sample period.
    Keywords: Dealer tank wagon; Hypermarkets; Motor fuel SBC laws; Petroleum; Vertical integration
    JEL: L11 L71 L22
    Date: 2009–06–18
  6. By: Reitz, Stefan; Rülke, Jan C.; Stadtmann, Georg
    Abstract: We use oil price forecasts from the Consensus Economic Forecast poll to analyze how forecasters form their expectations. Our findings seem to indicate that the extrapolative as well as the regressive expectation formation hypothesis play a role. Standard measures of forecast accuracy reveal forecasters' underperformance relative to the random walk benchmark. However, this result appears to be biased due to peso problems. --
    Keywords: Oil price,survey data,forecast bias,peso problem
    JEL: F31 D84 C33
    Date: 2009
  7. By: F. Shayeganfar; M. Holling; J. Peinke; M. Reza Rahimi Tabar
    Abstract: The level crossing analysis of DAX and oil price time series are given. We determine the average frequency of positive-slope crossings, $\nu_{\alpha}^+$, where $T_{\alpha} =1/\nu_{\alpha}^+ $ is the average waiting time for observing the level $\alpha$ again. We estimate the probability $P(K, \alpha)$, which provides us the probability of observing $K$ times of the level $\alpha$ with positive slope, in time scale $T_{\alpha}$. For analyzed time series we found that maximum $K$ is about $\approx 6$. We show that by using the level crossing analysis one can forecasts the DAX and oil time series (normalized log-returns) with good precision for the levels in the interval $-0.1 < \alpha < 0.1$ and $-0.35 < \alpha < 0.35$, respectively.
    Date: 2010–01
  8. By: Schröter, Marcus; Weißfloch, Ute; Buschak, Daniela
    Abstract: Langfristig steigende Energiekosten, der bereits eingesetzte Klimawandel und knapper werdende Ressourcen lassen die Energieeffizienz in der Produktion mehr und mehr zu einem strategisch wichtigen Thema im Verarbeitenden Gewerbe werden. Insgesamt schätzen die Betriebe des Verarbeitenden Gewerbes ihr Energieeinsparpotenzial auf 15% ein. Besonders Betriebe aus dem Fahrzeugbau und der Elektroindustrie sehen noch großes Potenzial zur Reduzierung des Energieverbrauchs in ihrer Produktion. Zur Erschließung des Einsparpotenzials ist der Einsatz von Effizienztechnologien notwendig. Gleichzeitig ist es auch wichtig, dass Betriebe energetische Schwachstellen in der Produktion erkennen und bei der Auswahl von Technologien den Energieverbrauch berücksichtigen. Es konnte gezeigt werden, dass Betriebe, die durch den Einsatz von Umweltkennzahlensystemen eine bessere Transparenz ihrer Stoff- und Energieverbräuche besitzen, verstärkt auf den Einsatz von Energieeffizienztechnologien setzen. Auch Betriebe, die bei Investitionsentscheidungen nicht nur die entstehenden Anschaffungsausgaben ins Kalkül ziehen, sondern die über die gesamte Lebensdauer entstehenden Kosten berücksichtigen, haben Energieeffizienztechnologien in ihrer Produktion vergleichsweise häufig implementiert. --
    Date: 2009
  9. By: Frederick van der Ploeg; Steven Poelhekke
    Abstract: Brunnschweiler and Bulte (2008) provide cross-country evidence that the resource curse is a “red herring” once one corrects for the endogeneity of natural resource exports and allows resource abundance to have an effect on growth. Their results show that resource exports are no longer significant while the value of subsoil assets has a significant positive effect on growth. But the measure of subsoil assets that has been used is based on World Bank estimates of natural capital, which are valued as proportional to current rents, and thus also endogenous. Furthermore, their results may suffer from omitted variables bias, weakness of the instruments, violation of exclusion restrictions and misspecification error. Correcting for these issues and instrumenting resource exports with values of proven reserves at the beginning of the sample period; there is no evidence for the resource curse either and subsoil assets are no longer significant. However, we provide evidence that resource dependence leads to more volatility and thus indirectly to worse growth prospects.
    Keywords: resource curse; resource exports; resource rents; natural capital; subsoil assets; reserves; instrumental variables; volatility
    JEL: F3 G11 G15
    Date: 2010–01
  10. By: Pietro F. Peretto (Duke University); simone Valente (CER-ETH - Center of Economic Research at ETH Zurich, Switzerland)
    Abstract: We analyze the relative growth performance of open economies in a two-country model where different endowments of labor and a natural resource generate asymmetric trade. A resource-rich economy trades resource-based intermediates for final manufacturing goods produced by a resource-poor economy. Productivity growth in both countries is driven by endogenous innovations. The effects of a sudden increase in the resource endowment depend crucially on the elasticity of substitution between resources and labor in interme- diates' production. Under substitution (complementarity), the resource boom generates higher (lower) resource income, lower (higher) employment in the resource-intensive sector, higher (lower) knowledge creation and faster (slower) growth in the resource-rich economy. The resource-poor economy adjusts to the shock by raising (reducing) the relative wage, and experiences a positive (negative) growth effect that is exclusively due to trade.
    Keywords: Endogenous Growth, Endogenous Technological Change, Natural Resources, International Trade.
    JEL: E10 F43 L16 O31 O40
    Date: 2010–01
  11. By: International Atomic Energy Agency IAEA
    Abstract: A concise overview of the energy related aspects of sustainable development programmes and declarations, followed by a short summary of events and documents explicitly devoted to energy matters are given. Recent arguments in the debate on sustainability are presented in order to provide the conceptual background for the sustainability assessment of Cuba’s energy system.
    Keywords: cuba, energy, sustainability, system, sustainable development, imports, resources, supply, biomass, renewwable, TECHNOLOGIES. technology, infrastructure,
    Date: 2010
  12. By: Katsuhiro Yamaguchi
    Abstract: With the advent of Shinkansen in 1964, a unique inter-city transport network in which high-speed railway and air transport developed simultaneously, emerged in Japan, and modal choice between them based on price and speed has been manifested. Looking ahead, the next generation high-speed transport, the Maglev, is on the horizon. In order to capture the full impacts of the Maglev technology, simulation analysis with a dynamic spatial nested logit model was conducted. From this, we identified a significant opportunity for the Maglev Super-express between Tokyo, Nagoya and Osaka, but with net benefitsexceeding net costs only with an annual economic growth of approximately 2% - 3% achieved in the next 65 years in Japan. If such economic condition were realized, the total air transport market would also continue to grow despite strong competition from the Shinkansen/Maglev system. Another point of interest is Maglev’s impact on reducing global warming. CO2 emission from Maglev is one-third of air transport. Introduction of Maglev Super-express in inter-city transport, however, also attracts passengers from Shinkansen that has five times lower CO2 emission intensity. Indeed, our simulation analysis shows that total CO2 emissions from high-speed inter-city transport increases when Maglev Super-express is introduced. Increase in total CO2 emission from electricity users including Maglev Super-express could be mitigated by energy conversion sector’s effort to reduce CO2 content of electric power supply, for instance, by increasing utilization of nuclear energy. Further research in assessing possible impact of capacity constraint in existing network, not considered in this paper, would facilitate deeper understanding of the future high-speed inter-city transport system.
    Date: 2009–12
  13. By: Marin, Giovanni; Mazzanti, Massimiliano
    Abstract: This paper provides new empirical evidence on Environmental Kuznets Curves (EKC) for CO2 and air pollutants at sector level. A panel dataset based on the Italian NAMEA (National Accounting Matrix including Environmental Accounts) over 1990-2006 is analysed, focusing on both emissions efficiency (EKC model) and total emissions (IPAT model). Results show that, looking at sector evidence, both decoupling and also eventually re-coupling trends could emerge along the path of economic development. The overall performance on greenhouse gases, here CO2, is not compliant with Kyoto targets. SOx and NOx show decreasing patterns, though the shape is affected by some outlier sectors with regard to joint emission-productivity dynamics. Services tend to present stronger delinking patterns across emissions than manufacturing. Trade expansion validates the pollution haven in some cases, but also show negative signs when only EU15 trade is considered: this may due to technology spillovers and a positive ‘race to the top’ rather than the bottom among EU15 trade partners. General R&D expenditure show weak correlation with emissions efficiency. EKC and IPAT derived models provide similar conclusions overall. Finally, we used SUR estimators (Seemingly Unrelated Regressions) for EKC models on manufacturing to have more efficient panel estimates (constrained model) and to test for slope heterogeneity (unconstrained model): the empirical evidence for CO2 and SOx emissions suggests that of manufacturing the slope varies across sectors. Further research should be directed towards deeper investigation of trade relationship at sector level and increased research into and efforts to produce specific sectoral data on ‘environmental innovations’.
    Keywords: NAMEA, trade openness, labour productivity, STIRPAT, SURE
    JEL: Q55 C23 Q56 O40
    Date: 2009–10–16
  14. By: Carlos Chávez (Departamento de Economía, Universidad de Concepción); Mauricio Villena (Escuela de Negocios, Universidad Adolfo Ibáñez); Johan Stranlund
    Abstract: We analyze the cost of enforcing a system of firm specific emissions standards vis a vis a transferable emissions permit system in the context of complete and incomplete information. We also examine the optimality of a transferable emissions permit system when abatement costs and enforcement costs are considered. We show that under incomplete information, regulation based on each firm-specific emissions standards cannot be less costly than a transferable emissions permit system. In addition, we found that the distribution of emissions that minimize aggregate program costs differ from the distribution of emissions generated by a competitive transferable emissions permit system.
    Keywords: Environmental policy, cost-effectiveness, enforcement costs, incomplete information.
    Date: 2009
  15. By: Brian Blankespoor; Susmita Dasgupta; Benoit Laplante; David Wheeler
    Abstract: Without international assistance, developing countries will adapt to climate change as best they can. Part of the cost will be absorbed by households and part by the public sector. Adaptation costs will themselves be affected by socioeconomic development, which will also be affected by climate change. Without a better understanding of these interactions, it will be difficult for climate negotiators and donor institutions to determine the appropriate levels and modes of adaptation assistance. This paper contributes by assessing the economics of adaptation to extreme weather events. We address several questions that are relevant for the international discussion: How will climate change alter the incidence of these events, and how will their impact be distributed geographically? How will future socioeconomic development, notably an increased focus on education and empowerment for women and girls, affect the vulnerability of affected communities? And, of primary interest to negotiators and donors, how much would it cost to neutralize the threat of additional losses in this context?
    Keywords: women; girls; extreme weather; education; economic development; climate change
    Date: 2010–01
  16. By: K. Bjorvatn; A. Naghavi
    Abstract: Are natural resources a source of conflict or stability? Empirical studies demonstrate that rents from natural resources, and in particular oil, are an important source of civil war. Allegedly, resource rents attract rent seekers, which destabilize society. However, there is a large literature on how so-called rentier states manage to pacify opposition groups by handing out special favors. The present paper attempts to bridge the gap between the rent-seeking view of resource rents as a source of conflict and the rentier state view which emphasizes the role of resource rents in promoting peace and stability, and show how one may lead to the other. The mechanism that we highlight relies on the notion that higher rents may activate more interest groups in a power struggle. We demonstrate that the associated increased cost of conflict may in fact promote social stability. The peaceful solution is upheld by a self reinforcing transfer program, in the form of patronage employment. The chance of conflict and rent dissipation in our model is highest for intermediate levels of resource rents, where the government cannot make credible commitments to the opposition groups.
    JEL: D74 Q34
    Date: 2010–01
  17. By: Escribano, Alvaro; Guasch, J. Luis; Pena, Jorge
    Abstract: This paper provides a systematic, empirical assessment of the impact of infrastructure quality on the total factor productivity (TFP) of African manufacturing firms. This measure is understood to include quality in the provision of customs clearance, energy, water, sanitation, transportation, telecommunications, and information and communications technology (ICT). Microeconometric techniques to investment climate surveys (ICSs) of 26 African countries are carried out in different years during the period 2002–6, making country-specific evaluations of the impact of investment climate (IC) quality on aggregate TFP, average TFP, and allocative efficiency. For each country the impact is evaluated based on 10 different productivity measures. Results are robust once controlled for observable fixed effects (red tape, corruption and crime, finance, innovation and labor skills, etc.) obtained from the ICSs. African countries are ranked according to several indices: per capita income, ease of doing business, firm perceptions of growth bottlenecks, and the concept of demeaned productivity (Olley and Pakes 1996). The countries are divided into two blocks: high-income-growth and low-income-growth. Infrastructure quality has a low impact on TFP in countries of the first block and a high (negative) impact in countries of the second. There is significant heterogeneity in the individual infrastructure elements affecting countries from both blocks. Poor-quality electricity provision affects mainly poor countries, whereas problems dealing with customs while importing or exporting affects mainly faster-growing countries. Losses from transport interruptions affect mainly slower-growing countries. Water outages affect mainly slower-growing countries. There is also some heterogeneity among countries in the infrastructure determinants of the allocative efficiency of African firms.
    Keywords: Transport Economics Policy&Planning,Economic Theory&Research,E-Business,Labor Policies,Infrastructure Economics
    Date: 2010–01–01
  18. By: Naude, Wim.; Alcorta, Ludovico.
    Keywords: Development, Industrial Policy, Environmental Sustainability
    Date: 2010
  19. By: Sylvie Geisendorf (Department of Economics, University of Kassel)
    Abstract: Climate-economic models are mainly intertemporal cost-benefit analyses, trying to balance the damages from climate change against mitigation costs and derive an optimal climate policy. In recent years, the huge importance of uncertainty about climate behaviour impinging such models has been emphasized and it has been argued that one-shot intertemporal optimization is an unrealistic venture. However, only few authors tried to explicitly model the impact of uncertainty on agents’ beliefs and resulting behaviour. Janssen´s (1996) “battle of perspectives” multi-agent climate-economy model is a notable exception. Based on a macro-economic climate-economy model, he implemented adaptive agents, holding different perspectives on the dynamics of climate change and necessary preventive action. The present paper aims to make a case for this model which has gone largely unnoticed by climate economics. It argues for more multi-agent based research in climate economics to analyse the importance of human beliefs. Finally, the paper will update the “battle of perspectives” with current data to investigate the significance of uncertain data for economic climate change models.
    Keywords: climate change, climate-economy models, multi-agent modelling, mitigation, perceptions,bounded rationality, learning
    Date: 2009–12
  20. By: Nancy Birdsall; Jan von der Goltz
    Abstract: In the run-up to the December 2009 Copenhagen climate conference, the authors surveyed members of the international development community with a special interest in climate change on three sets of detailed questions: (1) what action different country groups should take to limit climate change; (2) how much non-market funding there should be for emissions reductions and adaptation in developing countries, and how it should be allocated; and (3) which institutions should be involved in delivering climate assistance, and how the system should be governed. About 500 respondents from 88 countries completed the survey between November 19–24, 2009. About a third of the respondents grew up in developing countries, although some of them now live in developed countries. A broad majority of respondents from both developing and developed countries held very similar views on the responsibilities of the two different country groups, including on issues that have been very controversial in the negotiations. Most favored binding commitments now by developed countries, and commitments by 2020 by ‘advanced developing countries’ (Brazil, China, India, South Africa and others), limited use of offsets by developed countries, strict monitoring of compliance with commitments, and the use of trade measures (e.g. carbon-related tariffs) only in very narrow circumstances. Respondents from developing countries favored larger international transfers than those from developed countries, but the two groups share core ideas on how transfers should be allocated. Among institutional options for managing climate programs, a plurality of respondents from developed (48 percent) and developing (56 percent) countries preferred a UN-managed world climate fund, while many from both groups also embraced the UN Adaptation Fund’s approach, which is to accredit national institutions within countries which are eligible to manage implementation of projects that the Fund finances. Among approaches to governance, the most support went to the Climate Investment Fund model—of equal representation of developing and developed countries on the board.
    Keywords: carbon; climate change; copenhagen; negotiations
    Date: 2009–12

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