nep-ene New Economics Papers
on Energy Economics
Issue of 2013‒09‒13
twenty-one papers chosen by
Roger Fouquet
London School of Economics

  1. Energy market liberalisation and renewable energy policies in oecd countries By Francesco Vona; Francesco Nicolli
  2. Impact of Renewable Energy Policy and Use on Innovation: A Literature Review By Felix Groba; Barbara Breitschopf
  3. The green game changer: An empirical assessment of the effects of wind and solar power on the merit order By Böckers, Veit; Giessing, Leonie; Rösch, Jürgen
  4. Are we there yet? Improving solar PV economics and power planning in developing countries: The case of Kenya By Janosch Ondraczek
  5. WACC the Dog: The Effect of Financing Costs on the Levelized Cost of Solar Pv Power By Janosch Ondraczek; Nadejda Komendantova; Anthony Patt
  6. Designing an optimal 'tech fix' path to global climate stability: Directed R&D and embodied technical change in a multi-phase framework By Zon, Adriaan van; David, Paul
  7. On Biased Technical Change: Was technological change in Japan electricity-saving? By SATO Hitoshi
  8. Long-term memory in electricity prices: Czech market evidence By Ladislav Kristoufek; Petra Lunackova
  9. Reformas en la producción y distribución eléctrica y su relación con el sector manufacturero: el impacto de la sustitución de Luz y Fuerza del Centro por la Comisión Federal de Electricidad By Montufar Helu Jiménez, Alejandro
  10. The impact of stochastic extraction cost on the value of an exhaustible resource: An application to the Alberta oil sands By Abdullah Almansour; Margaret Insley
  11. Comparative statics for real options on oil: What stylized facts to use? By Lund, Diderik; Nymoen, Ragnar
  12. Economia de baixo carbono no Brasil: alternativas de políticas e custos de redução de emissões de gases de efeito estufa By Aline Magalhães; Edson Domingues
  13. Optimal Environmental Policy with Network Effects: Is Lock-in in Dirty Technologies Possible? By Mads, Greaker; Kristoffer, Midttømme
  14. Evaluating Carbon Capture and Storage in a Climate Model with Directed Technical Change By Durmaz, Tunç; Schroyen, Fred
  15. Essays on Energy Demand and Household Energy Choice By Karimu, Amin
  16. Grenzausgleichsinstrumente bei unilateralen Klimaschutzmaßnahmen. Eine ökonomische und WTO-rechtliche Analyse By Daniel Becker; Magdalena Brezskot; Wolfgang Peters; Ulrike Will
  17. On the timing of non-renewable resource extraction with regime switching prices: an optimal stochastic control approach By Margaret Insley
  18. Accounting for uncertainty in willingness to pay for environmental benefits By Daziano, Ricardo A.; Achtnicht, Martin
  19. Climate Change Policy under Spatially Structured Ambiguity: Hot Spots and the Precautionary Principle By Athanasios Yannacopoulos; Anastasios Xepapadeas
  20. Does the Acquisition of Mines by Firms in Resource-importing Countries Decrease Resource Prices? By HIGASHIDA Keisaku; MORITA Tamaki; MANAGI Shunsuke; TAKARADA Yasuhiro
  21. Den Strommarkt an die Wirklichkeit anpassen: Skizze einer neuen Marktordnung By Löschel, Andreas; Flues, Florens; Pothen, Frank; Massier, Philipp

  1. By: Francesco Vona (Ofce sciences-po, Skema Business School); Francesco Nicolli (Ceris/Cnr, University of Ferrara)
    Abstract: We analyse the impact of market liberalisation on renewable energy policies in OECD countries. To this end, we first develop an aggregated indicator of renewable energy policies using principal components analysis and then examine its determinants through panel data techniques. Our results are consistent with the predictions of political-economy models of environmental policies, as brown lobbying, proxied by entry barriers in the energy sector, and citizens preferences have the expected effects on policy. Brown lobbying has a negative effect on the policy indicator, even when accounting for endogeneity in its effects in a dynamic panel specification and using different policy indicators.Reducing income inequality,the ratification of the Kyoto protocol and stronger green parties all positively affect the approval of more ambitious policies but with less robust results.
    Keywords: Renewable energy policy,Energy market liberalisation,Political economy.
    JEL: Q42 Q48 D72 O38
    Date: 2013–07
  2. By: Felix Groba; Barbara Breitschopf
    Abstract: Technological changes in renewable energy technologies play an important role in the context of climate change as they contribute to a reduction of technology costs and lead to an increasing market penetration of emission reducing technologies. This paper provides a comprehensive literature review highlighting numerous motivations and necessities underlying the introduction of renewable energy policies. Starting with a brief overview on the induced innovation hypothesis, we show that policy intervention has been an effective tool to change relative prices, thus, incentivizing innovation, but that also various influencing factors are at play. We show that the literature agrees on the need for specific renewable energy policies in order to overcome concomitant market failures and barrier. We highlight that technology specific policies are generally understood as necessary complements to environmental non-technology specific policies in order to generate <br /> <br /> adequate demand in energy markets. However, in that respect, we outline the ongoing debate on the effectiveness of different technology specific policies on the demand-pull side and the role of technology-push policies. Additionally we provide a summary on methodological approaches to measure policy efforts and technological change respecting different impact levels and stages within the technological change process. Finally, by focusing on international competitiveness and technology cost we highlight two aspects of the effects renewable technology innovation and respective policy support.
    JEL: N70 O31 O32 O57
    Date: 2013
  3. By: Böckers, Veit; Giessing, Leonie; Rösch, Jürgen
    Abstract: We estimate the impact of renewable energy sources on the merit order and the wholesale price in Spain. We use a structural vectorautoregressive model for the merit order of production and argue that wind and solar production are exogenous to the system. As expected the overall effect is negative for the wholesale price and the produced quantities of most generation technologies. The estimated impact, however, is biggest for mid-merit plants. This finding sheds light on the theoretical discussion about which power plants are affected most by renewable energy sources. The effect is also mainly driven by wind power. Solar energy increases wholesale prices as peak plants enlarge their production with more solar power. --
    Date: 2013
  4. By: Janosch Ondraczek (University of Hamburg, Research Unit Sustainability and Global Change)
    Abstract: Despite the rapid decline in the cost of solar photovoltaic (PV) systems in the past five years, even recent academic research suggests that the cost of generating PV electricity remains too high for PV to make a meaningful contribution to the generation of grid electricity in developing countries. This assessment is reflected in the views of policymakers throughout Africa, who often consider PV as a technology suited only to remote locations and small-scale applications. This paper therefore analyzes whether, in contrast to conventional wisdom, PV is already competitive with other generation technologies. Analytically, the paper is based on a levelized cost of electricity (LCOE) model to calculate the cost of PV electricity in Kenya, which serves as a case study. Based on actual technology costs and Kenya’s solar resource, the LCOE from PV is estimated at USD 0.21/kWh for the year 2011, with scenario results ranging from USD 0.17-0.30/kWh. This suggests that the LCOE of grid-connected PV systems may already be below that of the most expensive conventional power plants, i.e. medium-speed diesel generators and gas turbines, which account for a large share of Kenya’s current power mix. This finding implies that researchers and policymakers may be mistaken in perceiving solar PV as a costly niche technology, rather than a feasible option for the expansion of power generation in developing countries.
    Keywords: solar photovoltaic electricity, on-grid electricity supply, levelized cost of electricity, developing countries, Africa
    JEL: C29 O12 Q42 Q48
    Date: 2013–04–18
  5. By: Janosch Ondraczek (University of Hamburg, Research Unit Sustainability and Global Change); Nadejda Komendantova; Anthony Patt
    Abstract: The photovoltaic (PV) power industry has grown rapidly in recent years, and associated with that growth has been a decline in costs. There are indications that PV has already reached cost-parity with power off the grid in some markets and projections that it will attain such grid parity in many more markets over the coming decade. Analysts have suggested that the growth in PV has come at an unnecessarily high price, with unnecessarily high subsidies. However, the factors influencing the cost of PV, and the subsidies required to sustain its construction, include more than just the strength of the sun. While differences in costs of such factors as initial capital spending, operation and maintenance, and decommissioning are hard to ascertain, it is possible to account for the cost of capital, on a country-by-country basis. In this paper, we therefore map the cost of solar PV globally, accounting for both the quality of the solar resource and the cost of capital in order to differentiate levelized costs of electricity (LCOE) from PV. Our results suggest that northern countries may not be an unwise location to subsidize PV construction, and further suggest that efforts to expand PV installation in developing countries may benefit greatly from policies designed to make low cost finance more widely available.
    Keywords: solar photovoltaic, levelized cost of electricity, cost of capital, global model
    JEL: C29 Q42 Q48
    Date: 2013–05–30
  6. By: Zon, Adriaan van (UNU-MERIT/MGSoG, and Maastricht University); David, Paul (SIEPR, and Economics Department, Standford University, and UNU-MERIT/MGSoG)
    Abstract: The research reported here gives priority to understanding the inter-temporal resource allocation requirements of a program of technological changes that could halt global warming by completing the transition to a "green" (zero net CO2-emission) production regime within the possibly brief finite interval that remains before Earth's climate is driven beyond a catastrophic tipping point. This paper formulates a multi-phase, just-in-time transition model incorporating carbon-based and carbon-free technical options requiring physical embodiment in durable production facilities, and having performance attributes that are amenable to enhancement by directed R&D expenditures. Transition paths that indicate the best ordering and durations of the phases in which intangible and tangible capital formation is taking place, and capital stocks of different types are being utilized in production, or scrapped when replaced types embodying socially more efficient technologies, are obtained from optimizing solutions for each of a trio of related models that couple the global macro-economy's dynamics with the dynamics of the climate system. They describe the flows of consumption, CO2 emissions and the changing atmospheric concentration of green-house gas (which drives global warming), along with the investment dynamics required for the timely transformation of the production regime. These paths are found as the welfare-optimizing solutions of three different "stacked Hamiltonians", each corresponding to one of our trio of integrated endogenous growth models that have been calibrated comparably to emulate the basic global setting for the "transition planning" framework of dynamic integrated requirements analysis modeling (DIRAM). As the paper's introductory section explains, this framework is proposed in preference to the (IAM) approach that environmental and energy economists have made familiar in integrated assessment models of climate policies that would rely on fiscal and regulatory instruments -- but eschew any analysis of the essential technological transformations that would be required for those policies to have the intended effect. Simulation exercises with our models explore the optimized transition paths' sensitivity to parameter variations, including alternative exogenous specifications of the location of a pair of successive climate "tipping points": the first of these initiates higher expected rates of damage to productive capacity by extreme weather events driven by the rising temperature of the Earth's surface; whereas the second, far more serious "climate catastrophe" tipping point occurs at a still higher temperature (corresponding to a higher atmospheric concentration of CO2). In effect, that sets the point before which the transition to a carbon-free global production regime must have been completed in order to secure the possibility of future sustainable development and continued global economic growth.
    Keywords: global warming, tipping point, catastrophic climate instability, extreme weatherrelated damages, R&D, directed technical change, capital-embodied technologies, optimal sequencing, multi-phase optimal control, sustainable endogenous growth
    JEL: Q54 Q55 O31 O32 O33 O41 O44
    Date: 2013
  7. By: SATO Hitoshi
    Abstract: Since the Great East Japan Earthquake, electricity generation has declined in Japan, and electricity prices have allegedly increased. The literature on biased technical change suggests that such electricity supply constraints may induce a biased technical change. This paper explores the extent to which the technical change in Japanese industries is biased, using a system of translog cost share equations where electricity and non-electric energy are separately treated as inputs. Using Japanese industry data over the 1973-2008 period, our findings confirm that technical change has been energy-saving but not electricity-saving in many industries, and that it tends to be labor-saving and capital-using. As a result, factor prices are much more important than technical change as a determinant of electricity's cost share.
    Date: 2013–09
  8. By: Ladislav Kristoufek; Petra Lunackova
    Abstract: We analyze long-term memory properties of hourly prices of electricity in the Czech Republic between 2009 and 2012. As the dynamics of the electricity prices is dominated by cycles -- mainly intraday and daily -- we opt for the detrended fluctuation analysis, which is well suited for such specific series. We find that the electricity prices are non-stationary but strongly mean-reverting which distinguishes them from other financial assets which are usually characterized as unit root series. Such description is attributed to specific features of electricity prices, mainly to non-storability. Additionally, we argue that the rapid mean-reversion is due to the principles of electricity spot prices. These properties are shown to be stable across all studied years.
    Date: 2013–09
  9. By: Montufar Helu Jiménez, Alejandro
    Abstract: The present paper is an analysis of electricity on the Mexican context as an input provided by the government. The approach consists in evaluating the effect on the manufacturing sector of an improvement in efficiency on electricity production and distribution. Noteworthy, the improvement is consequence of an anti-competitive event (i.e. decree by which one of both electricity state-owned firms was extinguished); although, it does not represent a pro-competitive source in terms of quality and reliability in electricity distribution and production, it indeed embodies a positive shock. The main result is a negative average effect on manufacturing sector, which consists in a minimum decline of 5 per cent or maximum decline of 10 per cent, both in terms of value production; in monetized figures, it represents a cost as minimum as $ 1 095 million pesos or as maximum as $ 1 574 million pesos. In general, the negative impact on value production is smaller as industry consumes more electricity; even, it can become positive if consumption of electricity is high enough. Furthermore, the positive effect on production implied by consumption of electricity is smaller as industry generates in a higher proportion its own electricity. In conclusion, the policy did not generate a positive net impact due to adjustment costs which consist in the costs of transferring resources from one sector to another.
    Keywords: electricity; mexico; adjustment costs; production; manufacturing sector; efficiency
    JEL: L52 L6 L60 L94 L98 Y4
    Date: 2013–02–13
  10. By: Abdullah Almansour (Department of Finance and Economics, King Fahd University of Petroleum and Minerals); Margaret Insley (Department of Economics, University of Waterloo)
    Abstract: The optimal management of a non-renewable resource extraction project is studied when input and output prices follow correlated stochastic processes. The decision problem is specified by two Bellman equations describing the project when it is currently operating or mothballed. Solutions are determined numerically using the Least Squares Monte Carlo methodology. The analysis is applied to an oil sands project which uses natural gas during extracting and upgrading. The paper takes into account the co-movement between crude oil and natural gas prices and proposes two price models: one incorporates a long-run link between the two while the other has no such link. Incorporating a long-run relationship between oil and natural gas prices has a significant effect on the value of the project and its optimal operation and reduces the sensitivity of the project to the natural gas price process.
    JEL: Q30 Q40 C61 C63
    Date: 2013–06
  11. By: Lund, Diderik (Dept. of Economics, University of Oslo); Nymoen, Ragnar (Dept. of Economics, University of Oslo)
    Abstract: Comparative-statics results for financial options are often assumed to hold for real options. But the effects of higher volatility need not be increased value and postponed investment. This depends on signs of correlations and what parameters are held constant. For real options, the rate-of-return shortfall may change. The CAPM is commonly used to determine this. In contrast with widespread assumptions, the empirical analysis shows that the correlation of the returns on oil and the stock market is nonpositive and not invariant to changes in volatility. For crude oil during 1993–2008, these changes are identified as three significant breaks.
    Keywords: real options; oil; volatility; CAPM; comparative statics
    JEL: D92 G13 G31 Q30 Q40
    Date: 2013–05–27
  12. By: Aline Magalhães (Face-UFMG); Edson Domingues (Cedeplar-UFMG)
    Abstract: Economia de baixo carbono no Brasil: alternativas de políticas e custos de redução de emissões de gases de efeito estufa
    Keywords: low-carbon economy, climate change, general equilibrium, Brazil
    JEL: Q52 Q54 C68
    Date: 2013–08
  13. By: Mads, Greaker (Statistics Norway); Kristoffer, Midttømme (Dept. of Economics, University of Oslo)
    Abstract: Network externalities could be present for many low or zero emission technologies. One obvious example is alternative fuel cars, whose use value depends on the network of service stations. The literature has only briefy looked at environmentally benefcial technologies. Yet, the general literature on network effects is mixed on whether governments need to intervene in order to correct for network externalities. In this paper we study implications of network effects on environmental policy in a discrete time dynamic game. Firms sell a durable good. One type of durable is causing pollution when being used, while the other type is "clean". Consumers' utility increase in the number of other users of the same type of durable, which gives rise to the network effect. We find that the optimal tax depends on the size of the clean network. If starting from a situation in which the dirty network dominates, the optimal tax may exceed the marginal environmental damage, thereby charging consumers for more than just their own emissions. Applying a Pigovian tax may, on the contrary, fail to introduce a socially beneficial clean network.
    Keywords: Network eects; lock-in; enviromnetal taxes
    JEL: H23 Q55 Q58
    Date: 2013–06–15
  14. By: Durmaz, Tunç (Dept. of Economics, Norwegian School of Economics and Business Administration); Schroyen, Fred (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: Carbon capture and storage (CCS) is considered a critical technology needed to curb CO2 emissions and is envisioned by the International Energy Agency (IEA) as an integral part of least-cost greenhouse gas mitigation policy. In this paper, we assess the extent to which CCS and R&D in CCS technology are indeed part of a socially efficient solution to the problem of climate change. For this purpose, we extend the intertemporal model of climate and directed technical change developed by Acemoglu et al. (2012, American Economic Review, 102(1): 131{66) to include a sector responsible for CCS. Surprisingly, even for an optimistic cost estimate available for CCS ($60/ton of CO2 avoided), we find that it is not optimal to deploy CCS or devote resources to R&D in CCS technology either in the near or distant future. Indeed, it is only when the marginal cost of CCS is less than $12/ton that a scenario with an active CCS sector (including R&D) becomes optimal, though not in the near future.
    Keywords: Carbon capture and storage CCS; climate.
    JEL: H23 O31 Q43 Q54 Q55
    Date: 2013–08–04
  15. By: Karimu, Amin (Department of Economics, Umeå School of Business and Economics)
    Abstract: This thesis consists of four self-contained papers related to energy demand and household cooking energy.<p> Paper [I] examine the impact of price, income and non-economic factors on gasoline demand using a structural time series model. The results indicated that non-economic factors did have an impact on gasoline demand and also one of the largest contributors to changes in gasoline demand in both countries, especially after the 1990s. The results from the time varying parameter model (TVP) indicated that both price and income elasticities were varying over time, but the variations were insignificant for both Sweden and the UK. The estimated gasoline trend also showed a similar pattern for the two countries, increasing continuously up to 1990 and taking a downturn thereafter. Paper [II] studies whether the commonly used linear parametric model for estimating aggregate energy demand is the correct functional specification for the data generating process. Parametric and nonparametric econometric approaches to analyzing aggregate energy demand data for 17 OECD countries are used. The results from the nonparametric correct model specification test for the parametric model rejects the linear, log-linear and translog specifications. The nonparametric results indicate that the effect of the income variable is nonlinear, while that of the price variable is linear but not constant. The nonparametric estimates for the price variable is relatively low, approximately 0.2.<p> Paper [III] relaxed the weak separability assumption between gasoline demand and labor supply by examining the effect of labor supply, measured by male and female working hours on gasoline demand. I used a flexible semiparametric model that allowed for differences in response to income, age and labor supply, respectively. Using Swedish household survey data, the results indicated that the relationship between gasoline demand and income, age and labor supply were non-linear. The formal separability test rejects the null of separability between gasoline demand and labor supply. Furthermore, there was evidence indicating small bias in the estimates when one ignored labor supply in the model.<p> Paper [IV] investigated the key factors influencing the choice of cooking fuels in Ghana. Results from the study indicated that education, income, urban location and access to infrastructure were the key factors influencing household’s choice of the main cooking fuels (fuelwood, charcoal and liquefied petroleum gas). The study also found that, in addition to household demographics and urbanization, the supply (availability) of the fuels influenced household choice for the various fuels. Increase in household income was likely to increase the probability of choosing modern fuel (liquefied petroleum gas and electricity) relative to solid (crop residue and fuelwood) and transition fuel (kerosene and charcoal).
    Keywords: Choice Probability; derivatives; energy policy; gasoline demand; propensity score; tax simulation; unobserved trend
    JEL: C22 C30 C40 D12 Q40 Q41
    Date: 2013–09–02
  16. By: Daniel Becker (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder)); Magdalena Brezskot (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder)); Wolfgang Peters (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder)); Ulrike Will (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder))
    Abstract: ENGLISH SUMMARY This paper examines to what extent the disadvantages of unilateral climate policy can be reduced by border adjustments. The disadvantages are primarily a competitive disadvantage for the domestic industry and the potential (over-) compensation of CO2 savings from increased emissions in other countries (carbon leakage). We investigate a CO2 tax as the climate policy tool that can be supported by a Border Tax Adjustment (BTA). In the economic part of the analysis a partial equilibrium trade model is used to demonstrate the impact on the competitive position and on global CO2 emissions if a CO2 tax and a BTA are analyzed. It is shown that is makes a difference whether these measures are introduced separately or as a package. In the legal part of the analysis, the WTO compatibility of a climate-policy motivated BTA is then examined. One possibility is to design a BTA that is consistent with the national treatment rule. Another one is to claim an exception based on Article XX GATT. The idea of a package solution of a CO2 tax and a BTA is reconsidered in our legal analysis. It may help to ease the justification of the proposed interventions into the world trading system. Finally, based on the economic and legal considerations, different design options to implement a BTA are presented. One proposal is a Carbon Added Tax in combination with a BTA similar to that for the VAT. Alternatively, the calculation of the BTA could be based on the carbon footprint, which would be more ambitious from a climate policy perspective. The advantages and disadvantages of both strategies are discussed. ZUSAMMENFASSUNG Diese Arbeit untersucht, inwieweit die Nachteile unilateraler Klimaschutzpolitik durch Grenzausgleichsinstrumente verringert werden können. Die Nachteile bestehen vor allem in einem Wettbewerbsnachteil für die eigene Industrie und der möglichen (Über-)kompensation von CO2- Einsparungen durch erhöhte Emissionen im Ausland (Carbon Leakage). Als klimaschutzpolitisches Instrument untersuchen wir eine CO2-Steuer, die durch einen Grenzsteuerausgleich (Border Tax Adjustment, BTA) flankiert werden kann. Im ökonomischen Teil der Analyse wird mit Hilfe eines partialanalytischen Handelsmodells gezeigt, wie sich die Wettbewerbsposition und die globalen CO2-Emissionen verändern, wenn eine CO2-Steuer und ein BTA analysiert werden. Hierbei ergibt sich ein wichtiger Unterschied, je nachdem, ob diese Maßnahmen getrennt oder als Paket eingeführt werden. Im juristischen Teil der Analyse wird dann die Kompatibilität mit dem Recht der Welthandelsorganisation (WTO) eines klimapolitisch motivierten BTA geprüft. Eine Möglichkeit ist, ein BTA so auszugestalten, dass das WTO-rechtliche Gebot der Inländergleichbehandung gewahrt ist. Eine weitere ist es, die Ausnahmeklausel des Art. XX GATT in Anspruch zu nehmen. Die Idee einer Paketlösung aus CO2-Steuer und BTA wird in der WTO-rechtlichen Prüfung aufgenommen und kann die Rechtfertigung der Eingriffe in das Handelssystem vereinfachen. Schließlich ergeben sich aus den ökonomischen und WTO-rechtlichen Überlegungen verschiedene Gestaltungsmöglichkeiten für ein BTA. Vorgeschlagen wird zum einen eine Carbon Added Tax in Kombination mit einem BTA ähnlich demjenigen zur Mehrwertsteuer. Alternativ könnte auch die klimapolitisch ambitioniertere Kalkulation des BTA auf Basis des Carbon Footprint verfolgt werden. Für beide Strategien werden die Vor- und Nachteile diskutiert.
    Keywords: Leakage, Border Tax Adjustment, Carbon Added Tax, Carbon Footprint, World Trade Organization
    JEL: F13 F18 K33
    Date: 2013–08
  17. By: Margaret Insley (Department of Economics, University of Waterloo)
    Abstract: This paper develops a model of a profit maximizing firm with the option to exploit a non-renewable resource, choosing the timing and pace of development. The resource price is modelled as a regime switching process, which is calibrated to oil futures prices. A Hamilton-Jacobi-Bellman equation is specified that describes the profit maximization decision of the firm. The model is applied to a problem of optimal investment in a typical oils sands in situ operation, and solved for critical levels of oil prices that would motivate a firm to make the large scale investment needed for oil sands extraction, as well to operate, mothball or abandon the facility. The paper focuses on the impact of regime shifts on the optimal timing of investment and extraction compared with the case when the possibility of future regime shifts is ignored.
    JEL: Q30 Q40 C61 C63
    Date: 2013–08
  18. By: Daziano, Ricardo A.; Achtnicht, Martin
    Abstract: Previous literature on the distribution of willingness to pay has focused on its heterogeneity distribution without addressing exact interval estimation. In this paper we derive and analyze Bayesian confidence sets for quantifying uncertainty in the determination of willingness to pay for carbon dioxide abatement. We use two empirical case studies: household decisions of energy-efficient heating versus insulation, and purchase decisions of ultralow-emission vehicles. We first show that deriving credible sets using the posterior distribution of the willingness to pay is straightforward in the case of deterministic consumer heterogeneity. However, when using individual estimates, which is the case for the random parameters of the mixed logit model, it is complex to define the distribution of interest for the interval estimation problem. This latter problem is actually more involved than determining the moments of the heterogeneity distribution of the willingness to pay using frequentist econometrics. A solution that we propose is to derive and then summarize the distribution of point estimates of the individual willingness to pay under different loss functions. --
    Keywords: Discrete Choice Models,Willingness to Pay,Credible Sets
    JEL: C25 D12 Q51
    Date: 2013
  19. By: Athanasios Yannacopoulos; Anastasios Xepapadeas
    Abstract: In view of the ambiguities and the deep uncertainty associated with climate change, we study the features of climate change policies that account for spatially structured ambiguity. Ambiguity related to the evolution of the natural system is introduced into a coupled economy-climate model with explicit spatial structure due to heat transport across the globe. We seek to answer questions about how spatial robust regulation regarding climate policies can be formulated; what the potential links of this regulation to the weak and strong version of the precautionary principle (PP) are; and how insights about whether it is costly to follow a PP can be obtained. We also study the emergence of hot spots, which are locations where local deep uncertainty may cause robust regulation to break down for the whole spatial domain, or the weak PP to be costly.
    Keywords: Ambiguity, Climate change, space, maxmin expected utility, robust control regulation, hot spots, precautionary principle
    JEL: Q54 Q58 D81 R11
  20. By: HIGASHIDA Keisaku; MORITA Tamaki; MANAGI Shunsuke; TAKARADA Yasuhiro
    Abstract: This paper examines both theoretically and empirically the effects of the acquisition of mines by firms in resource-importing countries on resource prices. In the theoretical part, we consider a simple two-period model. We demonstrate that the acquisition of mines may increase either present or future resource prices. This implies that the consumption of resources in either period may decrease. Strategic behavior of a resource-mining firm, demand for final goods, and extraction costs play key roles. In the empirical part, using a dynamic panel model and oil price data, we estimate the effect of the acquisition of mines on resource prices. We find that prices in the present period increase, while those in the future period decrease.
    Date: 2013–09
  21. By: Löschel, Andreas; Flues, Florens; Pothen, Frank; Massier, Philipp
    Abstract: Der deutsche Strommarkt ist im Umbruch. Strom aus erneuerbaren Quellen verdrängt solchen aus konventioneller Erzeugung. Gleichzeitig wird immer mehr Elektrizität im Norden Deutschlands produziert und muss zu den Verbrauchern im Süden transportiert werden. Die bestehende Marktordung fordert zwar effektiv den Ausbau erneuerbarer Elektrizitätserzeugung, geht aber mit hohen Kosten einher. Zudem entstehen regionale Ungleichgewichte zwischen Elektrizitätserzeugung und -nachfrage. Einerseits durch den Ausbau erneuerbarer Stromerzeugung vor allem im Norden, anderseits durch den Rückgang konventioneller Kapazitäten im Süden. Es verwundert nicht, dass momentan zahlreiche Vorschläge zur Reform des Erneuerbaren-Energien-Gesetzes und des Netzausbaus entwickelt und diskutiert werden. Die meisten bestehenden Vorschläge betrachten entweder den Ausbau der Erneuerbaren oder der Netze, gehen aber nicht auf die Interaktion zwischen beiden ein. Wir skizzieren eine neue Marktordung für den deutschen Strommarkt, die einen kosteneffizienten Ausbau der Erneuerbaren und die Stabilität der Netze gemeinsam berücksichtigt. Eine Prämie auf den Börsenstrompreis fördert die Erneuerbaren, während die Aufteilung des deutschen Strommarktes in mehrere Preiszonen hilft, effizient mit regionalen Kapazitäts- und Netzengpässen umzugehen. Durch die gezielte Stärkung von zeit- und regionalspezifischen Preissignalen erwarten wir eine deutliche Kostensenkung, sowohl im Vergleich zum bisherigen System als auch zu Vorschlägen, die den Ausbau der erneuerbaren Energien nicht mit Netzausbau und Rückgang an konventionellen Kapazitäten integrieren. --
    Keywords: Strommarkt,Erneuerbare Energien,Marktprämie,Market Splitting
    JEL: Q40 Q42 Q48
    Date: 2013

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