nep-ene New Economics Papers
on Energy Economics
Issue of 2015‒01‒03
thirty-six papers chosen by
Roger Fouquet
London School of Economics

  1. The green Paradox and Learning-by-Doing in the renewable energy sector By Nachtigall, Daniel; Rübbelke, Dirk
  2. An optimal mix of solar PV, wind and hydro power for a low-carbon electricity supply in Brazil By Johannes Schmidt; Rafael Cancella; Amaro Olímpio Pereira Junior
  3. An integrated approach to modelling energy policy in South Africa: Evaluating carbon taxes and electricity import restrictions By Arndt, Channing; Davies, Rob; Gabriel, Sherwin; Makrelov, Konstantin; Merven, Bruno
  4. Environmental policies in competitive electricity markets By Langestraat, R.
  6. Does Oil Promote or Prevent Coups? By Frode Martin Nordvik
  7. Growth and Mitigation Policies with Uncertain Climate Damage By Lucas Bretschger; Alexandra Vinogradova
  8. Transition to Clean Technology By Daron Acemoglu; Ufuk Akcigit; Douglas Hanley; William R. Kerr
  9. A Look Upstream: Electricity Market Restructuring, Risk, Procurement Contracts and Efficiency By Corrado Di Maria; Ian Lange; Emiliya Lazarova
  11. Transition to Clean Technology By Daron Acemoglu; Ufuk Akcigit; Douglas Hanley; William Kerr
  12. Optimal Pollution Standards and Non-Compliance in a Dynamic Framework By Arguedas, Carmen; Cabo, Francisco; Martín-Herrán, Guiomar
  13. Long Run Dynamics of World Food, Crude Oil Prices and Macroeconomic Variables: A Cointegration VAR Analysis By José M. Fernández
  14. ?Green economy? and spatial development of remote northern regions By Igor Shevchuk; Evgeny Zhirnel
  15. Optimal Gasoline Tax in Developing, Oil-Producing Countries: The Case of Mexico By Fausto Hernández-Trillo; Arturo Antón-Sarabia
  16. Improvement restriction data envelopment analysis for new energy in Japan By Soushi Suzuki
  17. How do oil price forecast errors impact inflation forecast errors? An empirical analysis from French and US inflation forecasts. By F. Bec; A. De Gaye
  18. The Impact of Oil Prices, Total Factor Productivity and Institutional Weakness on Russia’s Declining Growth By Kuboniwa, Masaaki
  19. Energy Efficiency of Selected OECD Countries: A Slacks Based Model with Undesirable Outputs By Nicholas Apergis; Goodness C. Aye; Carlos Pestana Barros; Rangan Gupta; Peter Wanke
  20. Restructuring the Electricity Industry: Vertical Structure and the Risk of Rent Extraction By Boom, Anette; Buehler, Stefan
  21. Energy poverty in Italy By Ivan Faiella; Luciano Lavecchia
  22. Nodal Pricing in a Coupled Electricity Market By Bjørndal, Endre; Bjørndal, Mette; Cai, Hong
  23. Weapons of Choice By Dreher, Axel; Kreibaum, Merle
  24. Does fuel price affect trucking industry’s network characteristics?: evidence from Denmark By Abate, Megersa
  25. Auswirkungen dezentraler Erzeugungsanlagen auf das Stromversorgungssystem: Ausgestaltungsmöglichkeiten der Bereitstellung neuer Erzeugungsanlagen By Poppen, Silvia
  26. A balance of questions: what can we ask of climate change economics? By Comerford, David
  27. Informal environmental regulation of industrial air pollution: Does neighborhood inequality matter? By Klara Zwickl; Mathias Moser
  28. The long-term impact of matching and rebate subsidies when public goods are impure: Field experimental evidence from the carbon offsetting market By Kesternich, Martin; Löschel, Andreas; Römer, Daniel
  29. Reciprocal Climate Negotiators: Balancing Anger against Even More Anger By Nyborg, Karine
  30. Estimating the Residential Land Damage of the Fukushima Accident By KAWAGUCHI, Daiji; YUKUTAKE, Norifumi
  31. Empirical Evidence on the Effects of Environmental Policy Stringency on Productivity Growth By Silvia Albrizio; Tomasz Koźluk; Vera Zipperer
  32. Modern trends and risks in the development of resource regions of Russia By Irina Ilina; Carol Scott Leonard; Evgenij Pliseckij
  33. Market Failures and Public Policy By Tirole, Jean
  34. Implications of the 2000 watt society for urban planning and economics. By Melanie Lienhard
  35. Technology Diffusion: Measurement, Causes and Consequences By Comin, Diego; Mestieri, Martí
  36. Christmas economics: A sleigh ride By Birg, Laura; Goeddeke, Anna

  1. By: Nachtigall, Daniel; Rübbelke, Dirk
    Abstract: The green paradox conveys the idea that climate policies may have unintended side effects when taking into account the reaction of fossil fuel suppliers. In particular, carbon taxes that will be implemented in the future induce resource owners to extract more rapidly which increases present carbon dioxide emissions and accelerates global warming. Our results suggest that future carbon taxes may even decrease present emissions if resource owners face increasing marginal extraction costs and if there is a clean energy source that is a perfect substitute and exhibits learning-by-doing (LBD). If the marginal extraction cost curve is sufficiently at, resource owners respond to a future carbon tax with lowering total extraction and only slightly increase present extraction. Moreover, taxation leads to higher energy prices which induces the renewable energy firms to increase output not only in the future, but also in the present because of the anticipated benefits from LBD. This crowds out energy from the combustion of fossil fuels and may outweigh the initial increase in present extraction, leading to less emissions in the present.
    Keywords: climate change,exhaustible resources,learning-by-doing,green paradox
    JEL: Q38 Q54 Q28 H23
    Date: 2014
  2. By: Johannes Schmidt (Institute for Sustainable Economic Development, Department of Economics and Social Sciences, University of Natural Resources and Applied Life Sciences, Vienna. Programa de Planejamento Energético / Universidade Federal de Rio de Janeiro); Rafael Cancella (Programa de Planejamento Energético / Universidade Federal de Rio de Janeiro); Amaro Olímpio Pereira Junior (Programa de Planejamento Energético / Universidade Federal de Rio de Janeiro)
    Abstract: Brazil has to quickly expand its power generation capacities due to significant growth of demand. Government plans aim at adding hydropower capacities in Northern Brazil, additional to wind and thermal power generation capacities. However, new hydropower may affect environmentally and socially sensitive areas in the Amazon region negatively while thermal power generation produces greenhouse gas emissions. We therefore assess how future greenhouse gas emissions from electricity production in Brazil can be minimized by optimizing the daily dispatch of photovoltaic, wind, thermal, and hydropower plants. Using a simulation model, we additionally assess the risk of loss of load. Results indicate that at doubled demand, only 2% of total power production has to be provided by thermal power plants. Existing reservoirs of hydropower plants are sufficient to balance variations in renewable electricity supply at an optimal mix of around 37% of PV, 9% of wind, and 50% of hydropower generation. In a hydro-thermal only scenario, the risk of deficit increases tenfold, and thermal power production four-fold. A sensitivity analysis shows that the choice of meteorological data sets used for simulating renewable production affects the choice of locations for PV and wind power plants, but does not significantly change the mix of technologies.
    Keywords: Brazil, greenhouse gas emissions, photovoltaic, wind, optimization
    JEL: Q42
    Date: 2014–12
  3. By: Arndt, Channing; Davies, Rob; Gabriel, Sherwin; Makrelov, Konstantin; Merven, Bruno
    Abstract: We link a bottom-up energy sector model to a recursive dynamic computable general equilibrium model of South Africa in order to examine two of the country.s main energy policy considerations: (i) the introduction of a carbon tax and (ii) liberalization of
    Keywords: integrated bottom-up model, the integrated MARKAL-EFOM system, computable general equilibrium, carbon tax, South Africa
    Date: 2014
  4. By: Langestraat, R. (Tilburg University, School of Economics and Management)
    Abstract: In this thesis we model and analyze several environmental policies in an existing mathematical representation of a perfectly competitive electricity market. We contribute to the literature by theoretically and numerically establishing a number of effects of environmental policies on investment strategies and prices. We provide a theoretical benchmark for environmental regulators aiming to achieve certain policy goals, and present a way to use numerical tools in case a complete theoretical analysis cannot be obtained. Two policies that charge firms for their carbon emissions, namely cap-and-trade and carbon taxation, are modeled into both a stylized deterministic and a two-stage stochastic framework. In the former we characterize equilibria, leading to key results on the dispatching order of technologies and identification of unused technologies. The latter framework is analyzed through a sampling study and focuses on the effectiveness of the policies in the presence of network limitations. We successively study a renewable energy obligation, which indirectly subsidizes electricity production from renewable resources through green certificates. We additionally explore the effects of technology banding, meaning that different renewable technologies are eligible for a different number of certificates. To account for some of the drawbacks of the existing UK technology banding system, we introduce an alternative banding policy. Finally, a feed-in tariff (FIT) is a direct subsidy on electricity production from renewable resources. In a stochastic framework we derive analytically that under linear cost assumptions, this price based instrument cannot guarantee that quantity based policy targets are met. Assuming non-linear convex cost, we find that the opposite holds and that a regulator has the freedom to set FITs in such a way that any desired mixture of renewable technologies can be attained at equilibrium. These FITs are derived analytically or, when necessary, estimated using the numerical tools that we propose.
    Date: 2013
  5. By: Vinicius Vale; Fernando Perobelli
    Abstract: Nowadays, an important debate in the international economies is the problem of greenhouse gas emissions and climate change related. Discussions begin to gain the world with the signature of the Kyoto Protocol (1997), where an international agreement was reached to reduce global emissions. However, in this context of mitigation, many controlling policies are based on reducing domestic emissions of GHG, which ignores, for example, CO2 emissions embodied in international trade. Moreover, given sudden expansion and globalization of world economies, pollution embodied in trade flows becomes important for measurement of responsibilities, because the use of final goods and production inputs that a country need not necessarily produced by itself, leading to a growing concern about the problem of carbon leakage. Thus, many studies have taken into consideration the estimated emissions embodied in international trade through, for example, the input-output analysis. In this context, this paper seeks to make an empirical investigation on the responsibility for emissions and international trade. We use data from WIOD, where the data structure consists of Input-Output Tables for 40 countries (27 EU countries and 13 other selected countries) plus the "Rest of the World" for the period 1995 to 2009. Furthermore, the production side is disaggregated into 35 productive sectors. Finally uses atmospheric emissions of CO2 for the same 40 countries selected and RoW. The overall aim is to measure emissions embodied in international trade and to analyze the interactions in terms of sectors and regional, from such countries. We propose the following specific aims: a) to observe, through CO2 emissions in international trade, if there is a concentration of emissions and if this behavior is maintained over the years (1995-2009), b) measure CO2 emissions embodied in production and consumption, c) measure the CO2 emissions embodied in exports and imports of each country and thus verify if the international trade has been used as a way to reduce emissions by countries, d) construction carbon balance for each country. The methodology used involves input-output techniques for calculating carbon emissions embodied in international trade. Thus, aggregate indicators for different countries are obtained, such as coefficients of intensity of CO2 emissions. Moreover, trade balances global CO2 emissions embodied in international trade are calculated and the major net exporters and net importers of CO2 emissions in the world economy are identified. Moreover, these indicators represent the empirical basis for the discussion on the responsibility for emissions, being possible, for example, to make a discussion of responsibilities between producer and consumer countries for environmental impacts. Finally, Miyazawa multipliers are calculated, a methodology that approach the issues of feedback loop between countries, through the decomposition of the Leontief inverse matrix in sub-matrices.
    Keywords: CO2 emissions; International trade; Multi-regional input-output model;
    JEL: C67 D57 Q53 Q54 Q56
    Date: 2014–11
  6. By: Frode Martin Nordvik
    Abstract: A large literature investigates the relation between oil and conflict, yet no empirical study has found any link between oil and coups d’´etat. Using a new data set on oil production separated into onshore and offshore production, and covering 172 countries from 1900 to 2012, onshore oil is seen to promote coup while o?- shore oil prevents them. A likely mechanism is that onshore oil motivates military build-ups, while o?shore oil does not. From a political leader’s point of view, a large military is a double-edged sword, because it may turn against him and stage a coup.
    Keywords: political economy, natural resoruces, coups d'état, military spending
    JEL: Q34 Q41 D74 H56 O17
    Date: 2014–10
  7. By: Lucas Bretschger; Alexandra Vinogradova
    Abstract: Climate physics predicts that the intensity of natural disasters will increase in the future due to climate change. One of the biggest challenges for economic modeling is the inherent uncertainty of climate events, which crucially aects consumption, investment,and abatement decisions. We present a stochastic model of a growing economy where natural disasters are multiple and random, with damages driven by the economy's polluting activity. We provide a closed-form solution and show that the optimal path is characterized by a constant growth rate of consumption and the capital stock untila shock arrives, triggering a downward jump in both variables. Optimum mitigation policy consists of spending a constant fraction of output on emissions abatement. This fraction is an increasing function of the arrival rate, polluting intensity of output, and the damage intensity of emissions. A sharp response of the optimum growth rate and the abatement share to changes in the arrival rate and the damage intensity justies more stringent climate policies as compared to the expectation-based scenario. We subsequently extend the baseline model by adding climate-induced uctuations around the growth trend and stock-pollution eects, demonstrating robustness of our results. In a quantitative assessment of our model we show that the optimal abatement expenditure at the global level may represent 0.9% of output, which is equivalent to a tax of $71 per ton carbon.
    Keywords: Climate policy, uncertainty, natural disasters, endogenoous growth
    JEL: O10 Q52 Q54
    Date: 2014
  8. By: Daron Acemoglu (Massachusetts Institute of Technology Department of Economics); Ufuk Akcigit (Department of Economics, University of Pennsylvania); Douglas Hanley (University of Pittsburgh); William R. Kerr (Harvard Business School, Entrepreneurial Management Unit)
    Abstract: We develop a microeconomic model of endogenous growth where clean and dirty technologies compete in production and innovation. in the sense that research can be directed to either clean or dirty technologies. If dirty technologies are more advanced to start with, the potential transition to clean technology can be di¢ cult both because clean research must climb several rungs to catch up with dirty technology and because this gap discourages research effort directed towards clean technologies. Carbon taxes and research subsidies may nonetheless encourage production and innovation in clean technologies, though the transition will typically be slow. We characterize certain general properties of the transition path from dirty to clean technology. We then estimate the model using a combination of regression analysis on the relationship between R&D and patents, and simulated method of moments using microdata on employment, production, R&D, firm growth, entry and exit from the US energy sector. The model's quantitative implications match a range of moments not targeted in the estimation quite well. We then characterize the optimal policy path implied by the model and our estimates. Optimal policy makes heavy use of research subsidies as well as carbon taxes. We use the model to evaluate the welfare consequences of a range of alternative policies.
    Keywords: carbon cycle, directed technological change, environment, innovation, optimal policy.
    JEL: O30 O31 O33 C65
    Date: 2014–12
  9. By: Corrado Di Maria (School of Economics, University of East Anglia); Ian Lange (Division of Economics and Business, Colorado School of Mines); Emiliya Lazarova (School of Economics, University of East Anglia)
    Abstract: This paper analyzes theoretically and empirically how upstream markets are affected by deregulation downstream. Deregulation tends to increase the level of uncertainty in the upstream market. Our theoretical analysis predicts that deregulated firms respond to this increase in uncertainty by writing more rigid contracts with their suppliers. Using the restructuring of the electricity market in the U.S. as our case study, we find support for our theoretical predictions. Furthermore, we investigate the impact this change in procurement contracts has on efficiency. Focusing on coal mines, we find that those selling coal to plants in restructured markets are significantly more productive than their counterparts working with regulated plants. On the other hand, we also find that transaction costs may have increased as a consequence of deregulation.
    Keywords: Energy Policy, Electricity Market Restructuring, Deregulation, Procurement Contracts, Risk, Efficiency
    JEL: L14 L15 Q31 Q48
    Date: 2014–11
  10. By: Pavel Ratner
    Abstract: Nowadays Russian government pays a lot of attention to solutions of the high energy intensive production system in the country. The key factors of low efficiency of regional energy saving programs is the lack of approved standards and algorithms in the area of energy audit. In practice, both technical and economical parameters of energy audit fluctuate in a very large range. It's due not only to different complexity of the audit but also the immaturity of the market. General population in Russia on its own has not yet embraced energy efficiency as a social value, therefore not many people are interested to invest in increasing energy efficiency of their homes and, therefore, to use algorithms for home energy audit suggested by well-known western companies such as Energy Star and others. New energy efficient home appliances can significantly reduce the energy consumption, however, the extent to which the theoretical reduction potential can be realized highly depends on individual decision processes. In this situation most of the small and middle-size companies as well as government organizations are getting more and more interested in some 'do-it-yourself' tools that can help to make very first steps in introduction of energy management systems and reduce the cost of professional energy audit. In this paper we present a simple interactive calculator, which can be used in individual flats and houses, office buildings and educational institutes such as colleges and schools, for assessment of electricity use by different categories of equipment. The user indicates only type of equipment and its approximate time of work. The program outputs the structure of energy consumption in graphic format. The results of test procedures and the ways for improvement of the program are discussed. The program is realised using the C++ programming language following the C++03 standard. It uses Qt libraries and provides graphical output in the form of a histogram, showing which energy appliances consume the most energy.
    Keywords: energy efficiency; energy audit; interactive calculator; energy consumption structure;
    JEL: Q41 Q48 C88
    Date: 2014–11
  11. By: Daron Acemoglu; Ufuk Akcigit; Douglas Hanley; William Kerr
    Abstract: We develop a microeconomic model of endogenous growth where clean and dirty technologies compete in production and innovation—in the sense that research can be directed to either clean or dirty technologies. If dirty technologies are more advanced to start with, the potential transition to clean technology can be difficult both because clean research must climb several rungs to catch up with dirty technology and because this gap discourages research effort directed towards clean technologies. Carbon taxes and research subsidies may nonetheless encourage production and innovation in clean technologies, though the transition will typically be slow. We characterize certain general properties of the transition path from dirty to clean technology. We then estimate the model using a combination of regression analysis on the relationship between R&D and patents, and simulated method of moments using microdata on employment, production, R&D, firm growth, entry and exit from the US energy sector. The model's quantitative implications match a range of moments not targeted in the estimation quite well. We then characterize the optimal policy path implied by the model and our estimates. Optimal policy makes heavy use of research subsidies as well as carbon taxes. We use the model to evaluate the welfare consequences of a range of alternative policies.
    JEL: C65 O30
    Date: 2014–12
  12. By: Arguedas, Carmen (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Cabo, Francisco (IMUVa: Departamento de Economía Aplicada (Matemáticas), Universidad de Valladolid); Martín-Herrán, Guiomar (IMUVa: Departamento de Economía Aplicada (Matemáticas), Universidad de Valladolid)
    Abstract: In this paper we present a Stackelberg differential game to study the dynamic interaction between a polluting firm and a regulator who sets pollution limits overtime. At each time, the firm settles emissions taking into account the fine for non-compliance, and balances current costs of investments in a capital stock which allows for future emission reductions. We show that the optimal effective pollution limit path, which is the pollution level above which the fine is truly imposed, decreases overtime, inducing a rise in capital stock and a decrease in both emissions and the level of non-compliance. If the effective pollution limit coincides with the pollution limit set by the regulator, we generally find a bounded value of the severity of the fine that maximizes social welfare. If the effective pollution limit is larger than the pollution limit set by the regulator due to fine discounts in exchange for firm’s investment in capital, the effect of a more severe fine depends on the magnitude of this discount. In the limiting scenario with a sufficiently large severity of the fine, emissions coincide with the effective pollution limit and no penalties are levied, since the firm shows adequate adaptation progress through capital investment.
    Keywords: non-compliance; fines; pollution standards; dynamic regulation; Stackelberg differential games.
    JEL: C61 C73 K32 K42 L51 Q28
    Date: 2014–11
  13. By: José M. Fernández
    Abstract: This study examines the long-run relationship between the real world price of maize, soybeans and sugar with the real world price of crude oil and a series of macroeconomic variables using a cointegration analysis from January 1982 until December 2012. The main empirical results support a strong causal relationship between maize and soybeans with crude oil, the real interest rate and the real U.S. exchange rate. Concretely, we show that real world crude oil prices are cointegrated with real world prices of maize and soybeans for the entire sample period and that real oil prices have a one-to-one relationship with these commodities. In other words, a one-percent increase in the price of real crude oil is associated with a one-percent increase in the price of maize and soybeans. Moreover, we find that permanent shocks to crude oil prices are transmitted to both maize and soybeans by a factor of 0.67 in both cases. In addition, our results show that despite the instability associated with the period between 2007/08, the long-run relationship between crude oil and these agricultural commodities has remained stable during the entire sample period. Finally, our results also support that although the real interest rate and the U.S. exchange rate are cointegrated with these commodities, it is only permanent shocks to real crude oil prices that have a permanent effect on these commodity price behavior.
    Keywords: Cointegration, crude oil, agricultural food commodities.
    JEL: O13 C01 C32
    Date: 2014–11
  14. By: Igor Shevchuk; Evgeny Zhirnel
    Abstract: Spatial development in remote areas is associated with a number of problems and hindrances, the main ones being the difficult demographic situation and poor infrastructure. By introducing "green" technologies one can begin to overcome infrastructural limitations, develop the economy and the settlement system through efficient utilization of local resources. This approach is implemented in practice within the international project "Green cities and settlements: sustainable spatial development in remote border areas" of the Karelia Cross-border Cooperation Programme of the European Neighbourhood and Partnership Instrument. "Green" cities and settlements are a model of communities that strive to live so as to reduce pollution, efficiently use local resources, convert wastes to energy, and thus minimize their input to climate change. The key is not only to develop the territory in a sustainable way, but also to eliminate infrastructural limitations and find new opportunities for local economic development. Land resources in many municipalities are now used very inefficiently because of the poor condition or absence of utility and power networks. Local administrations with their deficient budgets cannot handle the problem on their own, whereas businesses are not willing to invest at such scope. By reducing the dependence on centralized infrastructure, first of all energy infrastructure, one can expect the spatial hindrances to the development of settlements to be eliminated. The project pilot areas are the border municipalities in the north of the Republic of Karelia. The project outputs are proposals on how to actualize the potential of the territory, promote spatial development and business development. These proposals are concerned with the development of energy-efficient technologies, enterprise development, utilization of local resources for building the "green economy". Implementation of these plans requires a fundamentally new approach to the infrastructural development of municipalities. We believe "green" technologies today are an effective, if not the only, way to develop the energy, housing and utilities infrastructure in remote areas. These technologies can help maintain the settlement system by making the living in remote communities more comfortable. Many of such communities have the potential to become eco-settlements and focus on sustainable tourism. One of the project outputs is the Concept of establishing the cross-border cluster of energy-efficient technologies. The partnership network that has brought together Russian and Finnish entrepreneurs, scientific organizations that design and implement energy-efficient technologies can turn into a new arrangement for the development of northern border areas and formation of the "green economy".
    Keywords: green economy; entrepreneurship; northern border regions; clusters; energy-efficiency
    Date: 2014–11
  15. By: Fausto Hernández-Trillo (Division of Economics, CIDE); Arturo Antón-Sarabia (Division of Economics, CIDE)
    Abstract: This paper uses the methodology of Parry and Small (2005) to estimate the optimal gasoline tax for a less-developed, oil-producing country. The relevance of the estimation relies on the differences between less-developed countries LDCs and industrial countries. We argue that lawless roads, general subsidies on gasoline, poor mass transportation systems, older vehicle fleets and cities’ unregulated growth make the LDC tax rate differ substantially from rates in the developed world. We find that the optimal gasoline tax is $1.91 per gallon at 2011 prices and show that the estimate differences are in line with the factors hypothesized. In contrast to the existing literature on industrial countries, we illustrate that the relative gasoline tax incidence may be progressive in Mexico and, more generally, in LDCs.
    Keywords: gasoline tax, gasoline subsidy, tax incidence, Mexico
    JEL: Q40 Q48 H21
    Date: 2013–07
  16. By: Soushi Suzuki
    Abstract: Japan is faced with "the Fukushima' problem," in which a single nuclear accident has led to drastic electrical power shortages. Owing to the strong backlash of public opinion, almost all of Japan's 54 nuclear plants suspended operations. An intensive search has started for alternative forms of energy, ranging from fossil fuels to new energy, such as solar, wind, geothermal, small-scale hydroelectric and biomass energy. There is no clear-cut direction for energy policy, as each option involves costs and CO2 consequences and Japan has even withdrawn from the Kyoto protocol. A policy that balances energy and the environment is difficult to achieve in the short term; therefore, there is an urgent need for a comprehensive efficiency analysis of new energy in Japan. A popular tool for judging the efficiency of a Decision Making Unit (DMU) is Data Envelopment Analysis (DEA). The development of multiple efficiency improvement solutions based on DEA has progressed in recent years. An example is the Distance Friction Minimisation (DFM) method, based on a generalised distance function, which serves to improve a DMU's performance by tracing the most appropriate movement towards the efficiency frontier. To produce a more realistic improvement plan for low efficiency DMUs, we proposed a Target-Oriented (TO) DFM model that allows reference points that remain below the efficiency frontier. TO-DFM model specifies a Target-Efficiency Score (TES) for inefficient DMUs. This model is able to compute an improvement projection that an input reduction value and an output increase value in order to achieve a TES, even though in reality these values may have an infeasible case, for example Net-Working Rate may be required more than 100% in improvement projection, but it exceed a physical limit. This paper aims to present a newly developed adjusted DEA model, emerging from a blend of the TO-DFM and the Improvement Restriction (IR) approach, for generating an appropriate efficiency-improving projection model. The IR approach specifies a restriction input/output items based on absence or presence of the DMU's improvement limit. This approach can compute an input reduction value and an output increase value in order to achieve a TES that maintains an improvement restriction. The above-mentioned Improvement Restriction TO-DFM model will be applied to an efficiency analysis and will produce a realistic efficiency-improvement projection for new energies in Japan.
    JEL: C44 C61 Q42
    Date: 2014–11
  17. By: F. Bec; A. De Gaye
    Abstract: This paper proposes an empirical investigation of the impact of oil price forecast errors on inflation forecast errors for two different sets of recent forecasts data: the median of SPF inflation forecasts for the U.S. and the Central Bank inflation forecasts for France. Mainly two salient points emerge from our results. First, there is a significant contribution of oil price forecast errors to the explanation of inflation forecast errors, whatever the country or the period considered. Second, the pass-through of oil price forecast errors to inflation forecast errors is multiplied by around 2 when the oil price volatility is large.
    Keywords: Forecast errors, Inflation rate, Oil price, Threshold model.
    JEL: C22 E31 E37
    Date: 2014
  18. By: Kuboniwa, Masaaki
    Date: 2014–11
  19. By: Nicholas Apergis (School of Economics and Finance , Curtin University, Perth, Australia); Goodness C. Aye (Department of Economics, University of Pretoria); Carlos Pestana Barros (ISEG, University of Lisbon. Rua Miguel Lupi, 20. 1247-978 Lisbon.); Rangan Gupta (Department of Economics, University of Pretoria); Peter Wanke (COPPEAD Graduate Business School, Federal University of Rio de Janeiro Rua Paschoal Lemme, 355, Rio de Janeiro, Brazil CEP 21949-900.)
    Abstract: This paper presents an efficiency assessment of selected OECD countries using a Slacks Based Model with undesirable or bad outputs (SBM-Undesirable). In this research, SBM-Undesirable is used first in a two-stage approach to assess the relative efficiency of OECD countries using the most frequent indicators adopted by the literature on energy efficiency. Besides, in the second stage, GLMM-MCMC methods are combined with SBM-Undesirable results as part of an attempt to produce a model for energy performance with effective predictive ability. The results reveal different impacts of contextual variables, such as economic blocks and capital-labor ratio, on energy efficiency levels.
    Keywords: Energy, OECD, SBM-Undesitable, Two-stage GLMM-MCMC
    JEL: C6 D2 Q4
    Date: 2014–11
  20. By: Boom, Anette (Department of Economics, Copenhagen Business School); Buehler, Stefan (University of St. Gallen)
    Abstract: We study the role of vertical structure in determining generating capacities and retail prices in the electricity industry. Allowing for uncertain demand, we compare three market configurations: (i) integrated monopoly, (ii) integrated duopoly with wholesale trade, and (iii) separated duopoly with wholesale trade. We find that equilibrium capacities and retail prices are such that welfare is highest (lowest) under separated (integrated) duopoly. The driving force behind this result is the risk of rent extraction faced by competing integrated generators on the wholesale market. Our analysis suggests that vertical structure plays an important role in determining generating capacities and retail prices.
    Keywords: Electricity; Investments; Generating Capacities; Vertical Integration; Monopoly and Competition
    JEL: D42 D43 D44 L11 L12 L13
    Date: 2014–03–14
  21. By: Ivan Faiella (Banca d'Italia); Luciano Lavecchia (Banca d'Italia)
    Abstract: Despite the existence of two targeted national programmes (“Bonus gas” and “Bonus energia”) in Italy there is no official definition of energy poverty (EP). The purpose of this study is to provide the reader with a set of indicators to fill this gap. We present a range of poverty measures which estimate that between 5 and 20 per cent of households was in EP in 2012. A selection based on qualitative criteria suggests the use of a low-income/high-costs indicator modified to include the economically vulnerable households with no heating expenses. According to this statistic the proportion of households in EP during the period 1997-2012 was broadly stable at around 8 per cent. Our simulations indicate that the tools available to counter EP in Italy would have yielded a modest reduction in energy vulnerable households.
    Keywords: energy poverty, energy demand, inequality
    JEL: H23 I32 Q41
    Date: 2014–10
  22. By: Bjørndal, Endre (Dept. of Business and Management Science, Norwegian School of Economics); Bjørndal, Mette (Dept. of Business and Management Science, Norwegian School of Economics); Cai, Hong (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: This paper investigates a pricing model for an electricity market with a hybrid congestion management method, i.e. part of the system applies a nodal pricing scheme and the rest applies a zonal pricing scheme. The model clears the zonal and nodal pricing areas simultaneously. The nodal pricing area is affected by the changes in the zonal pricing area since it is directly connected to the zonal pricing area by commercial trading. The model is tested on a 13-node power system. Within the area that is applying nodal pricing, prices and surpluses given by the hybrid pricing model match well with those given by the full nodal pricing model. Part of the network is better utilized compared to the solutions given by the full zonal pricing model. However, the prices given by the hybrid system may send wrong economic signals which triggers unnecessary generation from existing capacities, exacerbates grid congestion, and induces higher re-dispatching costs.
    Keywords: Congestion Management; Nodal Pricing; Zonal Pricing; Electricity Market
    JEL: Q00
    Date: 2014–06–26
  23. By: Dreher, Axel; Kreibaum, Merle
    Abstract: We investigate the effect of natural resources on whether ethno-political groups choose to pursue their goals with peaceful as compared to violent means, distinguishing terrorism from insurgencies. We hypothesize that organizations are more likely to resort to terrorism rather than rebellion in richer countries where population mobilization is more difficult. We use data from the Minorities at Risk Organizational Behavior (MAROB) project, covering 118 organizations in 13 countries of the Middle East and North Africa over the 1980-2004 period. Our multinomial logit models combine group- and country-specific information and show that ethno-political groups are more likely to resort to rebellion rather than using peaceful means or becoming terrorists when representing regions rich in oil. Groups that participate in exerting power over their region are less likely to turn to large-scale violence.
    Keywords: oil; rebellion; resource curse; terrorism
    JEL: F51 Q34
    Date: 2014–07
  24. By: Abate, Megersa (VTI)
    Abstract: The 2000s were dominated by rising fuel prices and economic recession. Both had an impact on the structure of the trucking industry and how freight was moved. This paper examines how fuel prices shaped trucking industry’s network characteristics such as the average length of haul, average load, and capacity utilization. In particular, we show the effect of fuel price on average length of haul using 29 quarterly independent surveys from the Danish heavy goods vehicle (HGV) trip diary from 2004 to 2011. The results show that the average length of haul is sensitive to changes in fuel price: a DKK 1 (0.18$) increase in diesel price/liter leads to a 4 percent decrease in the average length of haul in the 2004-2007 period. This implies that firms improve transport efficiency by reducing the number of kilometers needed to transport a tonne of cargo as a short run response to fuel price increases. This result, however, is not confirmed for the years following the 2008 financial crisis. It also depends on where in the distribution of the average length of haul one looks.
    Keywords: Fuel Price; Networks; Trucking industry; Capacity utilization
    JEL: L92 Q41 R40
    Date: 2014–12–12
  25. By: Poppen, Silvia
    Abstract: Dezentrale Stromerzeugungskapazitäten nehmen eine zunehmend bedeutsame Position im Stromversorgungssystem ein. Der vorgenommene Ansatz zur Quantifizierung zeigt, dass dezentrale Erzeugungskapazitäten einen deutlichen Beitrag zur gesamten Erzeugungskapazität leisten. Im Zuge einer kooperativen Bereitstellung können technische, ökonomische und gesellschaftliche Anforderungen durch die Nutzung von Synergieeffekten bewältigt werden. Aufgrund ihrer Merkmale eignet sich insbesondere die genossenschaftliche Bereitstellung, da den gesellschaftlichen Anforderungen adäquat begegnet werden kann. Durch die Möglichkeiten der Partizipation ist eine Minimierung des Widerstandes ortsansässiger Bürger gegenüber dezentralen Energieprojekten möglich. Potentiale, die sich durch einen Zusammenschluss in einer Energiegenossenschaft ergeben, gilt es im Rahmen weiterer Analysen näher zu untersuchen.
    Abstract: Distributed power generation capacity is of growing importance for the power system. The quantification approach applied in this study shows a significant contribution of distributed generation capacity to the total generation capacity. A joint deployment can overcome technical, economic and social requirements through the use of synergy effects. The cooperative institutionalization meets social requirements adequately due to its intrinsic characteristics. The possibility of participation minimizes resistance of local citizens towards distributed energy projects. Therefore, a dedicated analysis of potentials of cooperatives is necessary.
    Date: 2014
  26. By: Comerford, David
    Abstract: The standard approach to the economics of climate change, which has its best known implementation in Nordhaus's DICE and RICE models (well described in Nordhaus's 2008 book, A Question of Balance) is not well equipped to deal with the possibility of catastrophe, since we are unable to evaluate a risk averse representative agent's expected utility when there is any signi cant probability of zero consumption. Whilst other authors attempt to develop new tools with which to address these problems, the simple solution proposed in this paper is to ask a question that the currently available tools of climate change economics are capable of answering. Rather than having agents optimally choosing a path (that differs from the recommendations of climate scientists) within models which cannot capture the essential features of the problem, I argue that economic models should be used to determine the savings and investment paths which implement climate targets that have been suggested in the physical science literature.
    Keywords: Climate Change, Catastrophe, Optimal Policy, Alternative Energy Investment,
    Date: 2013
  27. By: Klara Zwickl (Department of Socio-Economics, Vienna University of Economics and Business); Mathias Moser (Department of Economics, Vienna University of Economics and Business)
    Abstract: This paper analyzes if neighborhood income inequality has an effect on informal regulation of environmental quality, using census tract-level data on industrial air pollution exposure from EPA’s Risk Screening Environmental Indicators and income and demographic variables from the American Community Survey and EPA’s Smart Location Database. Estimating a spatial lag model and controlling for formal regulation at the states level, we find evidence that overall neighborhood inequality – as measured by the ratio between the fourth and the second income quintile or the neighborhood Gini coefficient – increases local air pollution exposure, whereas a concentration of top incomes reduces local exposure. The positive coefficient of the general inequality measure is driven by urban neighborhoods, whereas the negative coefficient of top incomes is stronger in rural areas. We explain these findings by two contradicting effects of inequality: On the one hand, overall inequality reduces collective action and thus the organizing capacities for environmental improvements. On the other hand, a concentration of income at the top enhances the ability of rich residents to negotiate with regulators or polluting plants in their vicinity.
    Keywords: Informal Regulation, Income Inequality, Collective Action, Industrial Air Pollution Disparities, Risk–Screening Environmental Indicators, Spatial Lag Model
    JEL: D3 H4 Q5 R2
    Date: 2014–11
  28. By: Kesternich, Martin; Löschel, Andreas; Römer, Daniel
    Abstract: In this paper, we investigate both short- and long-term impacts of financial stimuli on public goods provision when contributions are tied to individual harm-related behavior. We conduct a large-scaled field experiment to examine voluntary contributions to a carbon offsetting program during the online purchase of a bus ticket. We systematically vary the individual payoff structure by introducing different matching grants (1/3:1, 1:1, 3:1) and price rebates (r-25%, r-50%, r-75%). Our results show that price rebates are more effective than matching schemes in raising participation rates while matching grants induce higher contributions to the offsetting program. We suspect differences in the personal responsibility for the compensated emissions to drive this result. Analyzing repeated bookings, we find decreasing treatment effects for returning customers except for the case of 1:1 matching grants. The equal matching scheme is also the only intervention that increases net contributions of customers compared to the control group.
    Keywords: voluntary carbon offsets,randomized field experiment,public goods,rebate subsidy,matching subsidy
    JEL: H41 C93 D03 L92
    Date: 2014
  29. By: Nyborg, Karine (Dept. of Economics, University of Oslo)
    Abstract: I explore possible impacts of reciprocal preferences on participation in international environmental agreements. Reciprocal countries condition their willingness to abate on others' abatement. No participation is always stable. A full or majority coalition can be stable, provided that reciprocity is sufficiently strong and widespread. In addition, a stable minority coalition can exist, even with weak reciprocity preferences. This latter coalition is weakly larger than the maximum stable coalition with standard preferences, but is characterized by mutually negative sentiments.
    Keywords: International Environmental Agreements; Reciprocity; Coalitions
    JEL: F53 H87 Q54
    Date: 2014–08–30
  30. By: KAWAGUCHI, Daiji; YUKUTAKE, Norifumi
    Abstract: The cost of nuclear power generation critically depends on the damages caused by plant failure. We estimate the residential land damage caused by the failure of the Fukushima Daiichi nuclear power plant, as it forms a substantial part of the total damage, by observing the change in transaction prices before and after the accident with the degree of radioactive contamination. The estimates based on hedonic price equations, with the degree of radioactive contamination measured by airborne surveys, indicate that the contamination significantly decreased the price of residential land. The estimated total residential depreciation ranges from 2.19 to 2.65 trillion yen, approximately equivalent to 21.9-26.5 billion US dollars, or about 0.5% of Japan's GDP.
    Keywords: Fukushima, Nuclear Power Plant, Land Property Damage, Radioactive Contamination, Land Contamination
    JEL: Q51 Q53 R31
    Date: 2014–11–28
  31. By: Silvia Albrizio; Tomasz Koźluk; Vera Zipperer
    Abstract: This paper investigates the impact of changes in the stringency of environmental policies on productivity growth in OECD countries. Using a new environmental policy stringency (EPS) index, it estimates a reduced-form model of multi-factor productivity growth, where the effect of countries' environmental policies varies with pollution intensity of the industry and technological advancement. A multi-layer analysis provides insights at the aggregate economy, the industry and the firm level. At the aggregate economy level, a negative effect on productivity growth is found one year ahead of the policy change. This negative “announcement effect” is offset within three years after the implementation. At the industry level, a tightening of environmental policy is associated with a short-term increase in industry-level productivity growth, for the most technologically advanced country-industry pairs. This effect diminishes with the distance to the global productivity frontier, becoming insignificant at larger distances. At the firm level, only the technologically most advanced firms show a positive effect on productivity growth from a tightening of environmental policies, while a third of firms, the less productive ones, experience a productivity slowdown.<P>Données empiriques sur les effets de la sévérité des politiques environnementales sur la croissance de la productivité<BR>Ce document étudie l’impact qu’ont les modifications de la sévérité des politiques environnementales sur la croissance de la productivité dans les pays de l’OCDE. À l’aide d’un nouvel indice de sévérité des politiques environnementales (SPE), il estime un modèle en forme réduite de la croissance de la productivité multifactorielle, dans lequel l’effet des politiques environnementales des pays varie selon l’intensité de pollution de l’industrie et le degré d’avancement technologique. Une analyse multicouche donne des indications au niveau macro-économique, à celui de l’industrie et à celui des entreprises. Au niveau macro-économique, un effet négatif sur la croissance de la productivité est observé un an avant la modification des politiques. Cet « effet d’annonce » négatif est compensé dans un délai de trois ans après la mise en oeuvre. Au niveau de l’industrie, le durcissement des politiques environnementales est associé à une accélération à court terme de la croissance de la productivité pour les couples pays-industrie les plus avancés d’un point de vue technologique. Cet effet diminue jusqu’à devenir insignifiant à mesure qu’on s’éloigne de la frontière de productivité mondiale. Au niveau des entreprises, enfin, seules celles qui sont les plus en pointe du point de vue technologique voient la croissance de leur productivité influencée de façon positive par un durcissement des politiques environnementales, tandis qu’un tiers des entreprises, en l’occurrence les moins productives, accusent un ralentissement de leur productivité.
    Keywords: multifactor productivity, Porter hypothesis, environmental regulations, environmental policies, environmental policy stringency, sévérité des politiques environnementales, productivité multifactorielle, réglementation environnementale, hypothèse de Porter
    JEL: O44 O47 Q50 Q58
    Date: 2014–12–04
  32. By: Irina Ilina; Carol Scott Leonard; Evgenij Pliseckij
    Abstract: This paper, part of a larger project on governance and growth in Russia. It deals with the problems and priorities of the future development of primary producer regions of Russia. We design a regional strategy for socioeconomic development to 2025-2030. The analysis concerns growth and diversification of the economy of regions, where raw materials are abundant, in order to scale back the exploitation of mineral resources and diversify the economy. Almost all strategies involve a gradual change of the vector in the direction of modernization and diversification of the economy. We emphasize that the important role here is for a new regional policy. The paper examines regional financial resilience in Russia in the period following the global financial crisis. The level of risk is rising, as government emergency finance is withdrawn and regions face rising debt to cover even operational expenses, but "resource" regions seem securely well off, despite having been most affected by the financial crisis. This paper examines one region, Khanty-Mansiysk autonomous okrug (KhMAO), the largest "donor" to the federal budget, against the background of other mineral resource abundant regions. It traces developments since the dramatic budget reforms (late 1990s through 2005), including centralization of revenues and rationalized program expenditure (Alexeev and Weber 2013). It assesses regional budget and debt management in response to pressures from increased federal required expenditures, post-crisis withdrawal of subsidies, and the roll-out of new debt guidelines. It describes and explains KhMAO's stability and relative autonomy in these crisis conditions. The key questions are: Why are these "donor" regions, more affected by the crisis than others, also more resilient? Is Russia's growth core of regions financially stable because of federal intervention? How vulnerable is the resource region to future oil price shocks? Our findings are tenative, since there remain questions about transparency and soft budget constraints (Plekhanov 2006). We show federalism at its most cooperative: among other factors, regional collaborative action fosters flexible budgeting. In the longer run, the resilience of resource regions, such as KhMAO, with their overall steady growth, despite volatility in oil prices, arguably is due geopolitical factors, which attract energy producers and industrial giants other than in the oil sector, and the business environemnt, including steady maintenance of a higher standard of living and skills attracted in new clusters, which are supported by innovation-oriented budgets. The findings here, however, also include, even more fundamentally, an evolvinig cooperative federalist agenda, with groups of regions acting together to secure negotiated decisions on tax allocations and spending requirements. Supportive of the conclusion in Chebankova (2008), the term adaptive federalism applies to finance, and compels a rethinking of the concept of fiscal rigidity as applied to the Russian Federation.
    JEL: R58 R51 H70
    Date: 2014–11
  33. By: Tirole, Jean (Toulouse 1 Capitole University)
    Abstract: Jean Tirole delivered his Prize Lecture on 8 December 2014 at the Aula Magna, Stockholm University.
    Keywords: Market Power;
    JEL: D40
    Date: 2014–12–08
  34. By: Melanie Lienhard
    Abstract: Based on the increasing popularity and dispersal of the concept of the 2000 watt society the paper analyses what defines the concept and what kind of implications it has including the challenges in regards to urban planning and economics. The literature analysis has shown that a sufficient amount of research in regards to the implementation of the concept exists solely in the area of building technology. For further analysis a selection of criteria has been met which include: ? Mobility ? Living and Working ? Architecture and building typology ? Consumption ? Usage and user behaviour
    Keywords: Urbanisation; Environment; Energy; Regional Economics; R11 Regional Economic Activity: Growth; Development; and Changes
    Date: 2014–11
  35. By: Comin, Diego; Mestieri, Martí
    Abstract: This chapter discusses different approaches pursued to explore three broad questions related to technology diffusion: what general patterns characterize the diffusion of technologies, and how have they changed over time; what are the key drivers of technology, and what are the macroeconomic consequences of technology. We prioritize in our discussion unified approaches to these three questions that are based on direct measures of technology.
    Keywords: business cycles; drivers of technology; technology diffusion
    JEL: E3 O3 O4
    Date: 2014–09
  36. By: Birg, Laura; Goeddeke, Anna
    Abstract: Do you believe that at Christmas time the gas prices, the economy and the number of suicides peak? Do you think that the value of presents you are giving to your beloved is of importance? We show in this paper that conventional wisdom about Christmas is often doubtful. Furthermore, we give an idea of how Santa Claus - and maybe you - is able to finance Christmas celebrations, why emergency departments are a place to especially avoid during this time of the year and why Christmas tree growers might care to explain the differences across species to you this year. We cannot clearly establish whether Christmas entails a welfare loss or gain, however, we give you an idea as to which institutional settings might reduce a potential welfare loss. Also, we give advice about which behaviours might get you more Christmas presents from Santa this year. Finally, we find that more research is needed to give conclusive reasons why Santa Claus actually brings presents to (nearly) everyone.
    Keywords: christmas,Santa Claus,Rudolph the Red-Nosed Reindeer,elves,presents,welfare
    JEL: A12 D1 D6 E3 H4 I1 Z1
    Date: 2014

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