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on Regulation |
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Issue of 2005‒11‒05
eleven papers chosen by Christian Calmes Université du Québec en Outaouais, Canada |
| By: | Stephen Littlechild |
| Abstract: | The main Nordic residential electricity markets (Norway, Sweden and Finland) effectively opened to retail competition around 1998. They have not been subject to regulatory controls on prices or other contract terms. Between 11 and 29 per cent of residential customers have switched suppliers and between a fifth and a half of all residential customers have chosen alternative contractual terms of supply. These alternatives include fixed price contracts ranging from 3 months to five years duration, as well as spot-price related terms, instead of the standard variable tariffs. The use of these alternatives is increasing over time, and there is considerable product innovation. This paper surveys these developments and illustrates with case studies of significant suppliers in each Nordic market. The market is thus ascertaining and bringing about the outcomes that customers prefer. Without retail competition, it is not clear how regulation will replicate this aspect of the market process. |
| Keywords: | retail competition, electricity, regulation, Nordic countries |
| JEL: | L94 L L51 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0550&r=reg |
| By: | Tooraj Jamasb; Karsten Neuhoff; David Newbery; Michael Pollitt |
| Abstract: | In order to achieve overall economic efficiency, incentive regulation of electricity distribution utilities must address two important and inter-related issues. First, the utilities’ allowed revenues need to be set at correct levels. Second, the access charging mechanism by which the utilities recover the allowed revenues must give the correct economic signals to generation and load connected to the network. This paper is concerned with the latter aspect of regulation. The paper discusses the main economic principles that should form the basis on which a distribution access charging model is developed. The charging model should have a number of attributes: be calibrated to each existing network; contain an asset register; be able to determine assets needed to meet new demand; find least-cost system expansion; compute network losses and handle ancillary services; estimate incremental operating and maintenance costs; be available to users; and be simple enough for external users to understand. |
| Keywords: | Electricity, network regulation, access charges, distributed generation |
| JEL: | L43 L51 L94 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0551&r=reg |
| By: | Ram Singh (Delhi School of Economics) |
| Abstract: | Negligence-based liability has been justified on the grounds of its efficiency properties. However, this approach towards liability assignment has been criticized in several recent writings. In a series of articles, causation-based apportionment of liability has been recommended, as an alternative basis for liability assignment. In an interesting paper, Parisi and Fon (2004) have studied various properties of the causation-based liability. In this paper, I review some of their propositions. The main aim of the paper, however, is to investigate the implications of the ‘alternative’ specification of liability. The paper shows that a combination of negligence-based and causation-based liability makes the diligence strategies dominant choice for the agents. |
| Keywords: | liability rules, negligence-based liability, causation-based liability, comparative causation, economic efficiency |
| JEL: | K13 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:cde:cdewps:139&r=reg |
| By: | Mark Furletti |
| Abstract: | This is the third in a series of three papers that examines the laws, regulations, and voluntary industry practices that may aid consumers who contest an electronic transaction because of error, fraud, or merchant dispute. The first two papers describe the complex web of protections available to users of four popular electronic payment mechanisms: credit cards, debit cards, prepaid cards, and ACH e-checks. This third paper considers how protections related to fraud, error, and disputes affect market participants. The paper concludes that (i) the current protection mechanisms make it more difficult to encourage the adoption of fraud-reduction schemes, (ii) the current protections represent a significant cost to banks, merchants, processors, and consumers, and (iii) the present federal system of protection, while encouraging innovation and thoughtful regulation, leads to consumer confusion. |
| Keywords: | Payment systems ; Fraud ; Consumer protection |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpdp:05-14&r=reg |
| By: | Agarwal Anurag K |
| Abstract: | The globalized and liberalized Indian economy is witnessing cut-throat competition. To provide institutional support to healthy and fair competition, there is a requirement of better regulatory and adjudicatory mechanism. To this effect, India has enacted the new competition law which shall replace the earlier law. This is a shift from curbing monopolies to encouraging competition. The design of the new law carves out a very important role for the Competition Commission of India (CCI). The task has been divided in three phases. This article sets out to explain the intricate relationship of competition law and judiciary in India by examining the experience CCI had so far. The article then goes on to examine the role of lawyers. The article then considers the time frame for the implementation of the three phases and provides realistic suggestions to have a successful setting of competition regime in India. |
| Keywords: | Competition Advocacy, Competition Commission, India, Judiciary, Lawyers, MRTP Act |
| Date: | 2005–10–27 |
| URL: | http://d.repec.org/n?u=RePEc:iim:iimawp:2005-10-05&r=reg |
| By: | Tomas J. Philipson; Ernst R. Berndt; Adrian H. B. Gottschalk; Matthew W. Strobeck |
| Abstract: | The US Food and drug Administration (FDA) is estimated to regulate markets accounting for about 20% of consumer spending in the US. This paper proposes a general methodology to evaluate FDA policies, in general, and the central speed-safety tradeoff it faces, in particular. We apply this methodology to estimate the welfare effects of a major piece of legislation affecting this tradeoff, the Prescription Drug User Fee Acts (PDUFA). We find that PDUFA raised the private surplus of producers, and thus innovative returns, by about $11 to $13 billion. Dependent on the market power assumed of producers while having patent protection, we find that PDUFA raised consumer welfare between $5 to$19 billion; thus the combined social surplus was raised between $18 to $31 billions. Converting these economic gains into equivalent health benefits, we find that the more rapid access of drugs on the market enabled by PDUFA saved the equivalent of 180 to 310 thousand life-years. Additionally, we estimate an upper bound on the adverse effects of PDUFA based on drugs submitted during PDUFA I/II and subsequently withdrawn for safety reasons, and find that an extreme upper bound of about 56 thousand life-years were lost. We discuss how our general methodology could be used to perform a quantitative and evidence-based evaluation of the desirability of other FDA policies in the future, particularly those affecting the speed-safety tradeoff. |
| JEL: | I1 H0 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11724&r=reg |
| By: | David S. Evans; Albert L. Nichols; Richard Schmalensee |
| Abstract: | U.S. v. Microsoft and the related state suit filed in 1998 appear finally to have concluded. In a unanimous en banc decision issued in late June 2004, the D.C. Circuit Court of Appeals rejected challenges to the remedies approved by the District Court in November 2002. The wave of follow-on private antitrust suits filed against Microsoft also appears to be subsiding. In this paper we review the remedies imposed in the United States, in terms of both their relationship to the violations found and their impact on consumer welfare. We conclude that the remedies addressed the violations ultimately found by the Court of Appeals (which were a subset of those found by the original district court and an even smaller subset of the violations alleged, both in court and in public discourse) and went beyond them in important ways. Thus, for those who believe that the courts were right in finding that some of Microsoft's actions harmed competition, the constraints placed on its behavior and the active, ongoing oversight by the Court and the plaintiffs provide useful protection against a recurrence of such harm. For those who believe that Microsoft should not have been found liable because of insufficient evidence of harm to consumers, the remedies may be unnecessary, but they avoided the serious potential damage to consumer welfare that was likely to accompany the main alternative proposals. The remedies actually imposed appear to have struck a reasonable balance between protecting consumers against the types of actions found illegal and harming consumers by unnecessarily restricting Microsoft's ability to compete. |
| JEL: | K21 L1 L4 L6 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11727&r=reg |
| By: | Thomas I Palley; Robert M. LaJeunesse |
| Abstract: | Much has been written about union wage bargaining. Much less has been written about union density, which has been viewed as simply the employment outcome under the wage bargain. This paper presents a new dynamic model of union density that exhibits multiple equilibria and path-dependency. The model builds upon Freeman (1998) who identified the importance of union spending on organizing and business spending on opposing unions. It emphasizes the demand for union representation which depends on wage bargaining outcomes, the state of labor law, and socio-economic factors impacting public attitudes to unions. The model is used to provide a narrative account of the historical evolution of union density in the U.S. and to identify factors important for its future evolution. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:uma:periwp:wp93&r=reg |
| By: | Leo H. Kahane (California State University, East Bay); David Paton (Nottingham University Business School); Rob Simmons (Lancaster University Management School) |
| Abstract: | We use panel data from 1983 to 1997 for the 42 police force areas in England and Wales to test the hypothesis that legalizing abortion contributes to lower crime rates. We provide an advance on previous work by focusing on the impact of possible endogeneity of effective abortion rates with respect to crime. Our use of U.K. data allows us to exploit regional differences in the provision of free abortions to identify abortion rates. When we use a similar model and estimation methodology, we are able to replicate the negative association between abortion rates and reported crime found by Donohue and Levitt for the U.S. However, when we allow for the potential endogeneity of effective abortion rates with respect to crime, we find no clear connection between the two. |
| Keywords: | abortion, crime, fertility |
| JEL: | K42 I38 J13 |
| Date: | 2005–10–27 |
| URL: | http://d.repec.org/n?u=RePEc:nub:occpap:16&r=reg |
| By: | Ricardo J. Caballero; Eduardo M.R.A. Engel (Dept. of Economics, Yale University); Alejandro Micco |
| Abstract: | Microeconomic flexibility, by facilitating the process of creative-destruction, is at the core of economic growth in modern market economies. The main reason for why this process is not infinitely fast is the presence of adjustment costs, some of them technological, others institutional. Chief among the latter is labor market regulation. While few economists would object to such a view, its empirical support is rather weak. In this paper we revisit this hypothesis and find strong evidence for it. We use a new sectoral panel for 60 countries and a methodology suitable for such a panel. We find that job security regulation clearly hampers the creative-destruction process, especially in countries where regulations are likely to be enforced. Moving from the 20th to the 80th percentile in job security, in countries with strong rule of law, cuts the annual speed of adjustment to shocks by a third while shaving off about one percent from annual productivity growth. The same movement has negligible effects in countries with weak rule of law. |
| Keywords: | Microeconomic rigidities, creative-destruction, job security regulation, adjustment costs, rule of law, productivity growth |
| JEL: | E24 J23 J63 J64 K00 |
| Date: | 2004–09 |
| URL: | http://d.repec.org/n?u=RePEc:egc:wpaper:893&r=reg |
| By: | Suphachol Suphachalasai (Department of Land Economy, University of Cambridge) |
| Abstract: | This paper investigates the relationship between a bureaucracy and mass media industry, and its implications to corruption. We develop a bureaucratic model of corruption with mass media. A representative profit maximizing media firm seeks for corruption news to be printed and sold. Channels through which competition in media industry and press freedom affect equilibrium corruption in a bureaucracy are modeled. Different degrees of media freedom and competition affect production and employment decisions of media firms, and this in turn affects the effectiveness of media in monitoring corruption. Competition and freedom in media sector also have an influence on bureaucratic structure and consequently on equilibrium corruption. We find that the degree of competition in media market plays a significant role in controlling corruption. Freedom of media also reduces corruption. Empirical results support these findings. Media competition appears to be a more important tool to combat corruption than press freedom. The corruption problem in Italy could be reduced to the level experienced by France if the competitiveness of its media industry was to be improved to the same level as that of United Kingdom. |
| Keywords: | Corruption, Bureaucracy, Mass Media |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:lnd:wpaper:200505&r=reg |