nep-ene New Economics Papers
on Energy Economics
Issue of 2019‒07‒08
34 papers chosen by
Roger Fouquet
London School of Economics

  1. Addressing Climate Change through Price and Non-Price Interventions By Joseph E. Stiglitz
  2. Consumer myopia in vehicle purchases: evidence from a natural experiment By Kenneth Gillingham; Sébastien Houde; Arthur A. van Benthem
  3. Financing a Renewable Energy Feed-in Tariff with a Tax on Carbon Dioxide Emissions: A Dynamic Multi-Sector General Equilibrium Analysis for Portugal By Rui Marvão Pereira; Alfredo Marvão Pereira
  4. Achieving China's energy and climate policy targets in 2030 under multiple uncertainties By Duan, Hongbo; Mo, Jianlei; Fan, Ying; Wang, Shouyang
  5. What drives total real unit energy costs globally? A novel LMDI decomposition approach By Kaltenegger, Oliver
  6. Can APPealing and more informative bills "nudge" individuals into conserving electricity? By Meub, Lukas; Runst, Petrik; von der Leyen, Kaja
  7. Economic interactions between climate change and outdoor air pollution By Elisa Lanzi; Rob Dellink
  8. Mapping technological knowledge patterns: evidence from ocean energy technologies By Maïder SAINT-JEAN; Nabila ARFAOUI; Eric BROUILLAT; David VIRAPIN
  9. Assessment of Electric Vehicle Incentive Policies in Canadian Provinces By Roshanak Azarafshar
  10. Effects of B.C.’s Carbon Tax on GDP By Jean-Thomas Bernard; Misbahul Islam; Maral Kichian
  11. Public acceptance and willingness to pay cost-effective taxes on red meat and road traffic in Norway By Knut Einar Rosendahl; Ingvild Vestre Sem; Henrik Lindhjem; Kristine Grimsrud
  12. Pricing Patterns in Wholesale Electricity Markets: Unilateral Market Power or Coordinated Behavior? By Brown, David P.; Eckert, Andrew
  13. Demographic change and climate change By Michael Rauscher
  14. Optimal development of electricity generation mix considering fossil fuel phase-out and strategic multi-area interconnection By Fitiwi, Desta; Lynch, Muireann Á.; Bertsch, Valentin
  15. EU ETS and the new green paradox By Knut Einar Rosendahl
  16. Day-ahead electricity price forecasting with emphasis on its volatility in Iran (GARCH combined with ARIMA models) By Pourghorban, Mojtaba; Mamipour, Siab
  17. Motivating the Optimal Procurement and Deployment of Electric Storage as a Transmission Asset By Brown, David P.; Sappington, David E. M.
  18. Efforts of Oil Exporters in the Middle East and North Africa to Diversify Away from Oil Have Fallen Short By Adnan Mazarei
  19. Oil price volatility forecasts: What do investors need to know? By Degiannakis, Stavros; Filis, George
  20. The Impact of Car Pollution on Infant and Child Health: Evidence from Emissions Cheating By Alexander, Diane; Schwandt, Hannes
  21. Common Values, Unobserved Heterogeneity, and Endogenous Entry in U.S. Offshore Oil Lease Auctions By Giovanni Compiani; Philip A. Haile; Marcelo Sant'Anna
  22. Good for the environment, good for business: foreign acquisitions and energy intensity By Brucal, Arlan; Javorcik, Beata; Love, Inessa
  23. Environmental Regulation in a Transitional Political System: Delegation of Regulation and Perceived Corruption in South Africa By Pedro Naso
  24. DICE-RD: An Implementation of Rate-Related Damages in the DICE model By Heiko Wirths
  25. Modelling Strategy and Net Employment Effects of Renewable Energy and Energy Efficiency: A Meta-Regression By Spyridon Stavropoulos; Martijn J. Burger
  26. Examining eco-efficiency convergence of European Industries.The existence of technological spillovers within a metafrontier framework By Kounetas, Konstantinos; Stergiou, Eirini
  27. Beyond RCP8.5: Marginal Mitigation Using Quasi-Representative Concentration Pathways By William A. Brock; J. Isaac Miller
  28. Anticipatory Anxiety and Wishful Thinking By Jan Engelmann; Maël Lebreton; Peter Schwardmann; Joël van der Weele; Li-Ang Chang
  29. Evidenz zur Wirkung ausgewählter Klimaschutzmaßnahmen By Andor, Mark Andreas; Gerster, Andreas
  30. Forecasting Volatility and Co-volatility of Crude Oil and Gold Futures: Effects of Leverage, Jumps, Spillovers, and Geopolitical Risks By Manabu Asai; Rangan Gupta; Michael McAleer
  31. Growth and the environment: taking into account structural transformation By Julien Wolfersberger
  32. The Future of Swiss Hydropower Realities, Options and Open Questions By Barry, Michael; Betz, Regina; Fuchs, Sandro; Gaudard, Ludovic; Geissmann, Thomas; Giuliani, Gianluca; Hediger, Werner; Herter, Marc; Kosch, Mirjam; Romerio, Franco; Schillinger, Moritz; Schlange, Lutz; Schuler, Christoph; Schumann, René; Voegeli, Guillaume; Weigt, Hannes
  33. Distributional impacts of carbon taxation and revenue recycling: a behavioural microsimulation By Tovar Reaños, Miguel; Lynch, Muireann Á.
  34. Coal Transition in Australia: an overview of issues By Frank Jotzo; Salim Mazouz; John Wiseman

  1. By: Joseph E. Stiglitz
    Abstract: Recognizing the importance of the second-best nature of economies, the Stern-Stiglitz report on carbon pricing departed from the recommendation of a single carbon price for all uses at all places and times. This paper provides some of the analytics behind these recommendations. First, I analyze the circumstances in which distributional concerns make desirable a tax or regulation inducing significant reductions in carbon usage in a carbon-intensive sector for which consumers are disproportionately rich. Such policies allow lower carbon prices elsewhere without exceeding carbon emission targets. The cost of the resulting production inefficiency may, under the identified circumstances, be less than the distributional benefits. The paper considers the circumstances in which such differential policies may be best implemented through regulation vs. differential pricing, as well as differential effects on political economy and norm setting. Second, I consider the effect of carbon price trajectories on induced innovation, providing general conditions under which the optimal carbon path should, at least eventually, be falling over time. Finally, I revisit the price-versus-quantity debate and highlight important aspects of the dynamic nature of the problem.
    JEL: A1 H23 K32 Q52 Q54 Q55
    Date: 2019–06
  2. By: Kenneth Gillingham; Sébastien Houde; Arthur A. van Benthem
    Abstract: A central question in the analysis of fuel-economy policy is whether consumers are myopic with regards to future fuel costs. We provide the first evidence on consumer valuation of fuel economy from a natural experiment. We examine the short-run equilibrium effects of an exogenous restatement of fuel-economy ratings that affected 1.6 million vehicles. Using the implied changes in willingness-to-pay, we find that consumers act myopically: consumers are indifferent between $1 in discounted fuel costs and 15-38 cents in the vehicle purchase price when discounting at 4%. This myopia persists under a wide range of assumptions.
    Keywords: fuel economy, vehicles, myopia, undervaluation, regulation
    JEL: D12 H25 L11 L62 L71 Q40
    Date: 2019
  3. By: Rui Marvão Pereira; Alfredo Marvão Pereira
    Abstract: Renewable energy production subsidies alleviate the pressure on electricity prices associated with carbon and energy pricing policies in the process of decarbonization and electrification of the Portuguese economy. Our simulation results show that a feed in tariffs financed by a carbon tax leads to adverse macroeconomic as well as adverse and regressive distributional welfare effects. On the flip side, however, we show that use of the carbon tax revenues to finance a feed in tariff is an improvement over the simple carbon tax case along all the relevant policy dimensions. The feed in tariff mechanism when added to the carbon tax leads to better environmental outcomes at lower costs both in terms of the economic and social justice implications. The policy implications are clear. First, because of its adverse economic and distributional effects a carbon tax should not be used in isolation. The use of the revenues to finance a feed in tariff dominates the simple carbon tax case in all dimensions. Second, the search for the appropriate recycling mechanisms in addition to feed in tariffs is an issue as relevant as the carbon tax itself as it pertains to the potential reversal of the adverse effects of such a tax.
    Keywords: Dynamic General Equilibrium, Renewable Energy, Feed-in Tariff, Carbon Taxation, Macroeconomic Effects, Distributional Effects, Environmental Effects, Portugal
    JEL: C68 E62 H23 Q43 Q48
    Date: 2019–06
  4. By: Duan, Hongbo; Mo, Jianlei; Fan, Ying; Wang, Shouyang
    Abstract: The stringency of China's energy and climate targets in 2030 and the policy needed to realize these targets are full of controversy, mainly as a result of multiple future uncertainties. This study has developed a stochastic energy-economy-environment integrated model, to assess China's energy and climate targets in 2030, with a particular focus on the carbon intensity reduction, carbon emission peaking, and non-fossil energy development. The probabilities of realizing the targets are obtained, and the nexus among different targets is explored. It's argued that carbon emission management and policy-making should be implemented from the perspective of risk management, and policy makers can take corresponding policy measures based on the degree of confidence required under multiple future uncertainties. It is found that the probabilities of realizing carbon emission-peaking target and non-fossil energy target are low, with the business-as-usual efforts, and additional policies may still be needed. More specific, carbon pricing plays a major role in curbing and peaking carbon emissions, while the policy mix of carbon pricing and non-fossil energy subsidies can peak the carbon emission with relatively low cost compared to the single carbon pricing policy. It is also found that the carbon intensity reduction target is most likely to be attained, followed by the carbon-peaking target, and then the non-fossil energy target, given the same policy efforts. This indicates that, China may not deliberately increase carbon emissions rapidly over the next decade to make the carbon emission peak as high as possible; otherwise, it may be difficult to achieve the non-fossil energy target.
    Keywords: Integrated assessment model; Uncertainty; INDC target; China; Carbon emission peaking Carbon pricing; Renewable energy subsidy; 71774153; 71503242; 71403263; 71690245
    JEL: C63 O13 O33 O41 Q43 Q54
    Date: 2018–02–01
  5. By: Kaltenegger, Oliver
    Abstract: This paper presents a novel logarithmic mean Divisia index (LMDI) decomposition framework that is tailor-made for unit cost indicators. It adds four new models to the existing LMDI model family. The main novelty of the new framework lies in the separation of quantity and price effects captured in unit cost indicators, while retaining the same desirable properties of traditional models. Four case studies apply the novel LMDI framework to the total real unit energy costs (total RUEC) indicator. Total RUEC represents the sum of direct energy costs (for energy products) and indirect energy costs (energy costs embedded in intermediate inputs and passed on along global value chains) as a fraction of value added. This yardstick allows for monitoring shifts in the burden of energy costs on industries. The first three case studies, based on the World Input-Output Database, cover the period between 1995 and 2009. For an up-to-date analysis, a fourth case study collects additional data for 2009-2016 from energy and economic statistics' institutions. Globally, up until 2009, rising costs for crude petroleum/natural gas and the rise of China in the global economy were the largest drivers of total RUEC. In general, increases of indirect energy costs were more substantial than were those of direct energy costs. The total RUEC of Chinese car manufacturers increased much more strongly than did that of American car manufacturers. After 2009 (until 2016), prices for crude petroleum/natural gas and value added generation were major decelerating factors of global direct RUEC, while increases in energy consumption had offsetting effects. This paper provides a suitable tool to scientists who want to build on unit cost indicators in their research in general and to all policy-oriented institutions concerned with monitoring and analysing the energy transition in particular.
    Keywords: Logarithmic mean Divisia index,Structural decomposition analysis,Total real unit energy costs,Monitoring energy transition,Environmental-economic accounting,Multi-regional input-output analysis
    JEL: C43 C67 C82 E01 Q43
    Date: 2019
  6. By: Meub, Lukas; Runst, Petrik; von der Leyen, Kaja
    Abstract: We use a field experiment on energy billing in a German region to evaluate the effect of two behavioral nudges (consumption feedback and social comparison) on electricity consumption. Similar experiments have revealed significant treatment effects, yet the individual variance has proven substantial. On the grounds of these heterogeneous treatment effects and the possibility of cross-country behavioral differences, additional experiments are warranted. For our German participants with low pre-treatment consumption compared with many other countries, we find no treatment effects. Accordingly, we deduce from this that the effect of consumption feedback and social comparison is highly context dependent.
    Keywords: Energy efficiency,energy conservation,climate policy
    JEL: C9 D1 D8
    Date: 2019
  7. By: Elisa Lanzi; Rob Dellink
    Abstract: Climate change and outdoor air pollution are two of the most challenging environmental issues that modern society faces. These challenges are strongly linked through their emission sources, the sectors they affect and the policies that can be implemented to reduce emissions. They also interact in the way they affect economic growth in the coming decades, although this aspect has been neglected in the literature. This paper presents the first global analysis of the joint economic consequences of climate change and outdoor air pollution to 2060, in the absence of new policies to address these challenges. A common methodology and a consistent modelling framework is used to specify the main economic interaction effects. While this paper provides a useful framework to analyse the interactions between two environmental issues in the economic system, the results need to be interpreted carefully, because of limited data availability.
    Keywords: air pollution, Climate change, computable general equilibrium models
    JEL: C68 Q54 Q53
    Date: 2019–07–03
    Abstract: This article investigates the technological knowledge pattern underlying the recent evolution in ocean energy technology (OET) trajectories, especially tidal and wave energy, ocean thermal energy, salinity gradient energy and offshore wind energy. Examination of the relational properties among the knowledge elements in the OET knowledge base, in particular, their substitutability and complementarity, allows a better understanding of the coherence of this knowledge base and the technological trajectories within the sector. We use patent data extracted from the Questel ORBIT database. The various technical options related to OETs are identified by Cooperative Patent Classification (CPC) codes and enable the construction of a dataset of OET patents granted between 2000 and 2015. We analyze the main trends emerging from the patent statistics and we construct a network of citations among OET patents and apply to it a main path algorithm. This allows a mapping of all possible streams of cumulative growth of technological knowledge and identification of the most important ones. We show that the knowledge base of OETs is split into two main families and technology patterns depending on whether the harnessing of ocean power and its conversion to renewable low-carbon electricity derive from physical or chemical science. OET trajectories are somewhat compartmentalized with few connections amongst them; however, there are links between some pivotal tidal and wave energy and offshore wind energy patents which have become the foundations to an OET knowledge base. By focusing specifically on the physics-based family of OETs, we can investigate the structural aspects of this knowledge base and analyze the aggregate level of complementarity and substitutability of its knowledge constituent. Our analysis partly confirms the increased coherence of the OET knowledge base over time but also highlights its fluctuating nature which in some ways mirrors the intermittent nature of ocean energy funding, further slowing consensus over designs which is key to commercialization.
    Keywords: Ocean energy technology, citation network analysis, knowledge base, complementarity, substitutability, dominant design
    JEL: O33 Q42 Q55
    Date: 2019
  9. By: Roshanak Azarafshar (Department of Economics, University of Ottawa, Ottawa, ON)
    Abstract: This study aims to find the effects of financial point of sales incentives on the sales of electric vehicles across the Canadian provinces from September 2012 to December 2016. My findings indicate that purchase incentives cause the sales of new electric vehicles to increase by 8 percent on average due to a $1000 increase in incentives. I find that 47% of electric vehicle sales across the rebating provinces (Ontario, Quebec, and British Columbia) are attributed to the purchase incentives. Results of the counter-factual simulations imply that the cost of eliminating one tonne of carbon emissions across the provinces that offer incentives over the years of my study is, on average, $216/tonne CO2.
    Date: 2019
  10. By: Jean-Thomas Bernard (Department of Economics, University of Ottawa, Ottawa, ON); Misbahul Islam (Government of Canada and Department of Economics, University of Ottawa, Ottawa, ON); Maral Kichian (Graduate School of Public and International Affairs, University of Ottawa, Ottawa, ON)
    Abstract: The province of British Columbia, Canada, introduced a broad-based revenue-neutral carbon tax in July 2008; the rate was set to $10/tonne of CO2 initially, increased annually by $5/tonne until 2012 to reach $30/tonne, and remained at that level until 2017. We use the experience related to this unique initiative to shed some light on the controversy regarding the nature of the relationship between environmental taxes and overall economic activity. In particular, we test whether gasoline and diesel carbon taxes had any impact on GDP changes of the province, either positive or negative. Having found no evidence of asymmetry in the price impact, our analysis is conducted in the context of a standard VAR framework. We conclude that there is no statistically significant effect of carbon taxes on GDP change. The result is supported by tests on slope coefficient estimates as well as via dynamic simulations with and without carbon tax. We also find evidence of complete pass-through of carbon tax into price over time.
    Keywords: Environmental policies, British Columbia carbon tax, tax pass-through, vector auto-regression.
    JEL: H23 Q43 Q58
    Date: 2018
  11. By: Knut Einar Rosendahl; Ingvild Vestre Sem; Henrik Lindhjem; Kristine Grimsrud (Statistics Norway)
    Abstract: The Norwegian high-level Green Tax Commission proposes inter alia cost-effective taxes on red meat and increased toll charges on road traffic to reduce greenhouse gas emissions and local air pollution, respectively. Implementation requires support by the public, but the acceptance of such taxes is not known. We have conducted a national survey of the public's acceptance of the two taxes. The survey instrument showed dynamically the reduction in emissions/pollution for each tax level. Despite survey information about the purpose of the taxes, only 25 percent, on average, were in favour of their introduction, the rest did not know, had zero willingness to pay, or opposed the tax. In this respect, preferences for the two taxes are similar. However, on average people are willing to pay approximately 90 percent of the optimal tax for red meat, but only about 25-35 percent of toll charges on road traffic depending on fuel type. Earmarking the tax revenue for environmentally friendly technology increased acceptable tax level, but only for red meat. Earmarking tax revenues for reduced income tax did not increase the acceptable tax level.
    Keywords: Environmental taxes; red meat; road traffic; acceptance; willingness to pay
    JEL: H23 H31 Q51 Q53 Q54
    Date: 2019–06
  12. By: Brown, David P. (University of Alberta, Department of Economics); Eckert, Andrew (University of Alberta, Department of Economics)
    Abstract: We examine allegations that firms in Alberta's electricity industry manipulated public information to coordinate in the wholesale market. We investigate whether bids by firms who employed unique pricing patterns were consistent with unilateral expected profit maximization. Our results suggest that these firms could have increased expected profits through unilateral deviations. For one firm, the potential to increase profits is greater on days when certain offer patterns are observed, providing support for the claim that such patterns may have assisted coordination on high-priced outcomes. These results suggest that regulators should exercise caution when designing information disclosure policies in concentrated electricity markets.
    Keywords: Electricity; Market Power; Information; Regulation; Antitrust
    JEL: D43 L40 L51 L94 Q48
    Date: 2019–06–26
  13. By: Michael Rauscher
    Abstract: The paper uses a continuous-time overlapping-generations model with endogenous growth and pollution accumulation over time to study the link between longevity and global warming. It is seen that increasing longevity accelerates climate change in a business-as-usual scenario without climate policy. If a binding emission target is set exogenously and implemented via a cap-and-trade system, the price of emission permits is increasing in longevity. Longevity has no effect on the optimal solution of the climate problem if perfect intergenerational transfers are feasible. If these transfers are absent, the impact of longevity is ambiguous.
    JEL: Q56 O44 O41 J11 J19
    Date: 2019
  14. By: Fitiwi, Desta; Lynch, Muireann Á.; Bertsch, Valentin
    Date: 2019
  15. By: Knut Einar Rosendahl
    Abstract: With the new rules of the EU ETS, involving cancellation of allowances, cumulative emissions are no longer fixed but depending on the market outcome. Perino (2018) showed that additional abatement effort can reduce cumulative emissions if it occurs within a few years. This article shows that Perino’s result will be reversed, i.e., cumulative emissions increase, if the abatement effort is at a later year, or permanent. Thus, a new green paradox has emerged.
    Keywords: emissions trading, green paradox, EU ETS, MSR
    JEL: H23 Q54 Q58
    Date: 2019
  16. By: Pourghorban, Mojtaba; Mamipour, Siab
    Abstract: This paper provides a method to forecast day-ahead electricity prices based on autoregressive integrated moving average (ARIMA) and generalized autoregressive conditional heteroskedastic (GARCH) models. In the competitive power market environment, electricity price forecasting is an essential task for market participants. However, time series of electricity price has complex behavior such as nonlinearity, nonstationarity, and high volatility. ARIMA is suitable in forecasting, but it is not able to handle nonlinearity and volatility are existent in time series. Therefore, GARCH models are used to handle volatility in the in time series forecasting. The proposed method is computed using the daily electricity price data of Iran market for a five-year period from March 2013 to February 2018. The results reported in this paper illustrate the potential of the proposed ARMA-GARCH model and this combined model has been successfully applied to real prices in the Iranian power market.
    Keywords: Electricity price forecasting, ARIMA model, GARCH model
    JEL: C3 C32 C5 C53 Q4 Q47
    Date: 2019–02–14
  17. By: Brown, David P. (University of Alberta, Department of Economics); Sappington, David E. M. (University of Florida)
    Abstract: We analyze the design of policies to motivate an electric utility to employ its superior knowledge of industry conditions to: (i) choose between a traditional expansion of transmission capacity and storage as a transmission asset (SATA); and (ii) deploy SATA to either substitute for transmission service or supply electricity in wholesale markets. The optimal policy differs considerably from policies under active consideration, in part by paying the utility relatively little for implementing SATA. The utility of ten commands substantial rent from its privileged knowledge of the cost of installing and integrating SATA. However, the utility typically secures little additional rent from its superior knowledge of the likelihood of local network congestion.
    Keywords: storage as a transmission asset; electricity network congestion
    JEL: L51 L94
    Date: 2019–06–26
  18. By: Adnan Mazarei (Peterson Institute for International Economics)
    Abstract: Faced with fluctuating oil prices and other uncertainties, the oil-rich countries of the Middle East and North Africa have made efforts—some for decades—to diversify their exports, in order to reduce their dependence on oil revenue and generate much-needed jobs. The results of these diversification efforts have been disappointing overall, raising concerns about the region's stability and potential risk to the global economy. Transparent public debates and dialogue are needed, especially with the private sector, about policies that have worked and those that have not, the costs and benefits of various diversification strategies, and improving governance of public resources being used for diversification.
    Date: 2019–04
  19. By: Degiannakis, Stavros; Filis, George
    Abstract: Contrary to the current practice that mainly considers stand-alone statistical loss functions, the aim of the paper is to assess oil price volatility forecasts based on objective-based evaluation criteria, given that different forecasting models may exhibit superior performance at different applications. To do so, we forecast implied and several intraday volatilities and we evaluate them based on financial decisions for which these forecasts are used. In this study we confine our interest on the use of such forecasts from financial investors. More specifically, we consider four well established trading strategies, which are based on volatility forecasts, namely (i) trading the implied volatility based on the implied volatility forecasts, (ii) trading implied volatility based on intraday volatility forecasts, (iii) trading straddles in the United States Oil Fund ETF and finally (iv) trading the United States Oil Fund ETF based on implied and intraday volatility forecasts. We evaluate the after-cost profitability of each forecasting model for 1-day up to 66-days ahead. Our results convincingly show that our forecasting framework is economically useful, since different models provide superior after-cost profits depending on the economic use of the volatility forecasts. Should investors evaluate the forecasting models based on statistical loss functions, then their financial decisions would be sub-optimal. Thus, we maintain that volatility forecasts should be evaluated based on their economic use, rather than statistical loss functions. Several robustness tests confirm these findings.
    Keywords: Volatility forecasting, implied volatility, intraday volatility, WTI crude oil futures, objective-based evaluation criteria.
    JEL: C22 C53 G11 G17 Q47
    Date: 2019–06–11
  20. By: Alexander, Diane (Federal Reserve Bank of Chicago); Schwandt, Hannes (Northwestern University)
    Abstract: Car exhaust is a major source of air pollution, but little is known about its impacts on population health. We exploit the dispersion of emissions-cheating diesel cars—which secretly polluted up to 150 times as much as gasoline cars—across the United States from 2008-2015 as a natural experiment to measure the health impact of car pollution. Using the universe of vehicle registrations, we demonstrate that a 10 percent cheating-induced increase in car exhaust increases rates of low birth weight and acute asthma attacks among children by 1.9 and 8.0 percent, respectively. These health impacts occur at all pollution levels and across the entire socioeconomic spectrum.
    Keywords: Car pollution; health emissions-cheating; health; pollution
    JEL: I10 I14 J13 K32
    Date: 2019–06–13
  21. By: Giovanni Compiani (University of California, Berkeley, Haas School of Business); Philip A. Haile (Cowles Foundation, Yale University); Marcelo Sant'Anna (FGV EPGE)
    Abstract: In a "common values" environment, some market participants have private information relevant to others' assessments of their own valuations or costs. Economic theory shows that this type of informational asymmetry can have important implications for market performance and market design. Yet even for the classic example of an oil lease auction, formal evidence on the presence and strength of common values has been limited by the problem of auction-level unobserved heterogeneity that is likely to affect both participation in an auction and bidders' willingness to pay. Here we develop an empirical approach for first-price sealed bid auctions with affiliated values, unobserved heterogeneity, and endogenous bidder entry. We show that important features of the model are nonparametrically identified and apply a semiparametric estimation approach to data from U.S. offshore oil and gas lease auctions. Our empirical results show that common values, affiliated private information, and unobserved heterogeneity - three distinct phenomena with different implications for policy and empirical work - are all present. Failing to account for unobserved heterogeneity obscures the empirical evidence of common values. We examine the implications of our estimates for the classic revenue ranking of sealed bid auction designs, and for the interaction between affiliation, the winner's curse, and the number of bidders in determining the aggressiveness of bidding and seller revenue.
    Date: 2018–06
  22. By: Brucal, Arlan; Javorcik, Beata; Love, Inessa
    Abstract: The link between foreign ownership and environmental performance remains a controversial issue. This paper contributes to our understanding of this subject by analyzing the impact of foreign acquisitions on plant-level energy intensity. The analysis applies a difference-in-differences approach combined with propensity score matching to the data from the Indonesian Manufacturing Census for the period 1983-2001 (or 1983-2008 in robustness checks). It covers 210 acquisition cases where an acquired plant is observed two years before and at least three years after an ownership change and for which a carefully selected control plant exists. The results suggest that while foreign ownership increases the overall energy usage due to expansion of output, it decreases the plant's energy intensity. Specifically, acquired plants reduce energy intensity by about 30% two years after acquisition, relative to the control plants. In contrast, foreign divestments tend to increase energy intensity. At the aggregate level, entry of foreign-owned plants is associated with industry-wide reduction in energy intensity.
    Keywords: FDI; Foreign acquisition; foreign divestment; energy intensity; Indonesia
    JEL: F21 Q56
    Date: 2019–06
  23. By: Pedro Naso
    Abstract: I study the economic motivations behind a reduction in the discretionary power of environmental regulators, and the impact that such reduction has on perceived corruption in South Africa. I examine the transition from the Air Pollution Protection Act of 1965 to the Air Quality Act of 2005, a change from full to partial delegation of regulation. By constructing a principal-agent model, I argue that this transition might have occurred because of an increase in the dispersion of rent-seeking motivations of public agents. This happens because, from the principal’s perspective, the possible harm— loose pollution control and misappropriation of environmental fines—generated by corrupt agents is greater than the potential benefits brought by diligent agents. In my empirical analysis, I use diff-in-diffs models for a two-period panel with 191 South African firms to show that the regulatory change decreased treated firms’ perceived corruption, but did not improve other institutional quality measures.
    Keywords: Environmental Regulation;Political System; South Africa; Corruption
    JEL: O14 O33 Q41 Q42
    Date: 2019–06–20
  24. By: Heiko Wirths (Amprion GmbH, Dortmund, Germany)
    Abstract: A growing body of literature from the natural and the social sciences indicates that the rate of temperature increase is another key driver of total climate damages, next to the absolute increase in temperature compared to the pre-industrial level. Nonetheless, the damage functions employed in integrated assessment models that aim at studying the economics of climate change are usually based on the absolute temperature increase alone. Hence, these models neglect additional damag-es that will occur if the rate of temperature increase exceeds a certain threshold that overstrains the adaptive capacities of ecological and social systems. In the present paper, we implement such rate-related damages in the well-known integrated assessment model DICE-2016R. Using the resulting model variant DICE-RD we show for several different scenarios that an insufficient climate policy that ignores rate-related damages can lead to substantial economic losses.
    Keywords: integrated assessment, DICE model, climate policy, rate of temperature increase
    JEL: O44 Q54 Q58
    Date: 2019–06
  25. By: Spyridon Stavropoulos (Erasmus University Rotterdam); Martijn J. Burger (Erasmus University Rotterdam)
    Abstract: By conducting a meta-analysis of the empirical literature on the net employment effects of renewable energy, we explore the extent to which the reported net employment effects are driven by the applied methodology. We find that the reported conclusions on net employment effects are to a large extent driven by the methodology that is applied, where computable general equilibrium (CGE) and I/O methods that include induced effects and studies that consider only the near future in their study period (up to 2020) are generally less optimistic about net employment creation in the wake of the energy transition. In addition, we found that policy reports have a greater tendency to report a positive net employment effect than academic studies.
    Keywords: renewable energy, net employment, meta-analysis, circular economy
    JEL: J21 Q42
    Date: 2019–06–21
  26. By: Kounetas, Konstantinos; Stergiou, Eirini
    Abstract: European policies regarding global warming have been outspread the last few decades with many initiatives for industrial production process. In this paper we model eco-efficiency performance under a meta-frontier framework for 14 industries from the manufacturing sector from 27 European countries over the 1995-2011 period. The utilization of NOx, SOx, CO2, CH4, N2O, CO, NMVOC and NH3 as undesirable outputs and GVA as the desirable represent the impact of of economic activities on the environment. In the first stage, we estimate eco-efficiency using the conventional Directional Distance Function (DDF) as well as the non-radial DDF approach. In the second stage of analysis, we investigate the existence of conditional and unconditional convergence according to several methodologies. Our eco-efficiency estimates provide a distinct behavior for energy intensive European industries. Moreover, a decline occurs for the majority of them. In addition, our results using distributional dynamics approach and the recent approach of Philips and Sul (2007) supports the non-convergence hypothesis and the creation of distinct clubs. Finally, the establishment of a catch up index indicate an increase in a speed of convergence.
    Keywords: Eco-efficiency,Non-parametric frontier analysis, Convergence, Technological heterogeneity,European Industries.
    JEL: C22 C44 D2 D24 Q4 Q40 Q52
    Date: 2019
  27. By: William A. Brock; J. Isaac Miller (Department of Economics, University of Missouri)
    Abstract: Assessments of decreases in economic damages from climate change mitigation typically rely on climate output from computationally expensive precomputed runs of general circulation models (GCMs) under a handful of scenarios with discretely varying targets, such as the four representative concentration pathways (RCPs) for CO2 and other anthropogenically emitted gases. Although such analyses are extremely valuable in informing scientists and policymakers about specific, well-known, and massive mitigation goals, we add to the literature by considering potential outcomes from more modest policy changes that may not be represented by any concentration pathway or GCM output. We construct computationally efficient Quasi-representative Concentration Pathways (QCPs) in order to leverage existing scenarios featuring plausible concentration pathways. Computational efficiency allows for common statistical methods for assessing model uncertainty based on iterative replication, such as bootstrapping. We illustrate by feeding two QCPs through a computationally efficient statistical emulator and dose response functions extrapolated from estimates in the recent literature in order to gauge effects of mitigation on the relative risk of heat stress mortality.
    Keywords: representative concentration pathways, statistical emulation, climate change mitigation, heat stress mortality
    JEL: C14 C33 C63 Q54
    Date: 2019
  28. By: Jan Engelmann (University of Amsterdam); Maël Lebreton (University of Geneva); Peter Schwardmann (LMU Munich); Joël van der Weele (University of Amsterdam); Li-Ang Chang (CREED - University of Amsterdam)
    Abstract: It is widely hypothesized that anxiety and worry about an uncertain future lead to the adoption of comforting beliefs or "wishful thinking". However, there is little direct causal evidence for this effect. In our experiment, participants perform a visual pattern recognition task where some patterns may result in the delivery of an electric shock, a proven way of inducing anxiety. Participants engage in significant wishful thinking, as they are less likely to correctly identify patterns that they know may lead to a shock. Greater ambiguity of the pattern facilitates wishful thinking. Raising incentives for accuracy does not significantly decrease it.
    Keywords: confidence, beliefs, anticipatory utility, anxiety, motivated cognition
    JEL: D83 C91
    Date: 2019–06–21
  29. By: Andor, Mark Andreas; Gerster, Andreas
    Abstract: Klimapolitik erhitzt die Gemüter. Neben der derzeit breit diskutierten einheitlichen CO2-Steuer gibt es eine Vielzahl an Maßnahmen, auf die es sich lohnt, einen genaueren Blick zu werfen. Das RWI hat die Wirksamkeit und Effizienz ausgewählter Instrumente der Klimapolitik evaluiert und die Resultate in dieser RWI Position zusammengefasst. Die Ergebnisse zeigen zum Beispiel, wie die Energieeffizienz in Privathaushalten gefördert werden kann: So führt eine Veröffentlichungspflicht für den Gebäudeausweis zu einer stärkeren Berücksichtigung von Energieeffizienz in Immobilienpreisen. Zudem entscheiden sich Haushalte häufiger für energieeffiziente Geräte, wenn das EU-Energielabel auch über die Betriebskosten der Geräte informiert. Darüber hinaus zeigen die Evaluationen, dass erneuerbare Energien das Auftreten negativer Preisspitzen am Strommarkt fördern - ein Effekt, der durch eine Umstellung des Fördermodells verhindert werden kann. Andere Politikmaßnahmen eignen sich dagegen nicht: Die Evaluationen zeigen, dass Energiesparbriefe mit sozialem Vergleich in den meisten Industriestaaten nicht kosteneffektiv und daher als Politikinstrument nicht zu empfehlen sind.
    Date: 2019
  30. By: Manabu Asai (Faculty of Economics, Soka University, Japan); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa); Michael McAleer (Department of Finance, Asia University, Taiwan; Discipline of Business Analytics, University of Sydney Business School, Australia; Econometric Institute, Erasmus School of Economics, Erasmus University Rotterdam, The Netherlands; Department of Economic Analysis and ICAE Complutense University of Madrid, Spain and Institute of Advanced Sciences, Yokohama National University, Japan)
    Abstract: For purposes of forecasting the covariance matrix for the returns of crude oil and gold futures, this paper examines the effects of leverage, jumps, spillovers, and geopolitical risks, using their respective realized covariance matrices. In order to guarantee the positive definiteness of the forecasts, we consider the full BEKK structure on the conditional Wishart model. By the specification, we can divide flexibly the direct and spillover effects of volatility feedback, negative returns, and jumps. The empirical analysis indicates the benefits in accommodating the spillover effects of negative returns and the geopolitical risks indicator for modelling and forecasting the future covariance matrix.
    Keywords: Commodity Markets, Co-volatility, Forecasting, Geopolitical Risks, Jumps, Leverage Effects, Spillover Effects, Realized Covariance
    JEL: C32 C33 C58 Q02
    Date: 2019–07
  31. By: Julien Wolfersberger (ECO-PUB - Economie Publique - INRA - Institut National de la Recherche Agronomique - AgroParisTech)
    Abstract: This paper analyzes how structural transformation (as defined by the reallocation of economic activity across sectors) can explain the differences in pollution emissions across countries. Since pollution per unit of output differs across sectors, environmental quality can vary as a result of the rise of services at the expense of industry and in absence of environmental policy: this is the composition effect. An amended model of structural transformation is developed, where pollution is a by-product of output, and the predictions of the model are then tested empirically by studying labor reallocation and carbon emissions in 120 countries over the 1992-2014 period. The results show that different productivity growth rates across sectors drive structural transformation in the sample, and that composition is crucial to understand the differences in CO 2 emissions across countries. Importantly, I find that the importance of convergence, traditionally the main factor to explain the effect of economic growth on the environment, is lowered by more than 30% when structural transformation is taken into account.
    Keywords: Structural transformation,Environment
    Date: 2019–06–14
  32. By: Barry, Michael; Betz, Regina; Fuchs, Sandro; Gaudard, Ludovic; Geissmann, Thomas; Giuliani, Gianluca; Hediger, Werner; Herter, Marc; Kosch, Mirjam; Romerio, Franco; Schillinger, Moritz (University of Basel); Schlange, Lutz; Schuler, Christoph; Schumann, René; Voegeli, Guillaume; Weigt, Hannes (University of Basel)
    Abstract: The NRP70 project 'The Future of Swiss Hydropower: An Integrated Economic Assessment of Chances, Threats and Solutions' (HP Future) has been initiated in 2014 with the objective to identify options for Swiss hydropower (HP) to adopt to the ongoing and expected electricity system changes. The project has been finalized in 2018 and this final report provides an overview of the obtained results and insights. Following a short summary of the main findings is provided.
    Date: 2019–06
  33. By: Tovar Reaños, Miguel; Lynch, Muireann Á.
    Date: 2019
  34. By: Frank Jotzo (Crawford School of Public Policy, The Australian National University); Salim Mazouz (Crawford School of Public Policy, The Australian National University); John Wiseman (University of Melbourne)
    Abstract: Australia produces and exports large amounts of thermal coal. This industry is likely to be in long term decline. This paper provides an overview of Australian coal production and exports and discusses issues for the transition of the coal industry. It sketches possible scenarios for declining domestic use of thermal coal, and summarizes a case study of the closure of the Hazelwood power station and the programs to help the regional social and economic adjustment.
    Date: 2018–09

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