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on Regulation |
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Issue of 2006‒02‒19
eleven papers chosen by Christian Calmes Universite du Quebec en Outaouais, Canada |
| By: | Paul L Joskow |
| Abstract: | Modern theoretical principles to govern the design of incentive regulation mechanisms are reviewed and discussed. General issues associated with applying these principles in practice are identified. Examples of the actual application of incentive r egulation mechanisms to the regulation of prices and service quality for “unbundled” transmission and distribution networks are presented and discussed. Evidence regarding the performance of incentive regulation in practice for electric distribution and transmission networks is reviewed. Issues for future research are identified. |
| Keywords: | regulation, incentives, networks, electricity, transmission, distribution |
| JEL: | L94 L51 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0607&r=reg |
| By: | Francois, Joseph; Wörz, Julia |
| Abstract: | We develop a mixed complementarity programming (MCP) based estimating framework for non-tariff barriers (NTBs) to examine the evolution of market access conditions in the textile and clothing sectors, working with a panel of bilateral trade data on textile and clothing trade, underlying bilateral tariffs, and the country-pair coverage of quotas under the WTO's Agreement on Textiles and Clothing (ATC). Our estimating framework takes advantage of the panel nature of trade data when calculating export tax equivalents while allowing for inequality constraints on the quota premium estimates. We also introduce Gaussian quadrature for estimating goodness of fit for regression-based NTB measures based on residual fitting. |
| Keywords: | ATC; Gaussian Quadrature; import quotas; MFA; NTB estimation |
| JEL: | C15 F13 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5477&r=reg |
| By: | Francois, Joseph; Horn, Henrik |
| Abstract: | We examine antitrust rules in a two-county general equilibrium trade model, contrasting national and multilateral (cooperative) determination of competition policy, exploring the properties of the policy equilibrium. It is not imperfect competition, but variation in competitive stance between sectors that matters for trading partners. Beggar-thy-neighbor competition policies relate to countries' comparative advantages, and hurt the factor intensively used, or specific to, the imperfectly competitive sector. They also create a competitive advantage for export firms. FDI can be pro-competitive in this context, reducing the scope for beggar-thy-neighbor policies and reducing the gains from a multilateral competition agreement. |
| Keywords: | antitrust policy; competition policy; FDI; merger policy; trade and imperfect competition |
| JEL: | F12 F3 L4 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5480&r=reg |
| By: | Donohue, John J; Wolfers, Justin |
| Abstract: | Does the death penalty save lives? A surge of recent interest in this question has yielded a series of papers purporting to show robust and precise estimates of a substantial deterrent effect of capital punishment. We assess the various approaches that have been used in this literature, testing the robustness of these inferences. Specifically, we start by assessing the time series evidence, comparing the history of executions and homicides in the United States and Canada, and within the United States, between executing and non-executing states. We analyse the effects of the judicial experiments provided by the Furman and Gregg decisions and assess the relationship between execution and homicide rates in state panel data since 1934. We then revisit the existing instrumental variables approaches and assess two recent state-specific execution moratoria. In each case we find that previous inferences of large deterrent effects based upon specific samples, functional forms, control variables, comparison groups, or IV strategies are extremely fragile and even small changes in specifications yield dramatically different results. The fundamental difficulty is that the death penalty - at least as it has been implemented in the United States - is applied so rarely that the number of homicides that it can plausibly have caused or deterred cannot be reliably disentangled from the large year-to-year changes in the homicide rate caused by other factors. As such, short samples and particular specifications may yield large but spurious correlations. We conclude that existing estimates appear to reflect a small and unrepresentative sample of the estimates that arise from alternative approaches. Sampling from the broader universe of plausible approaches suggests not just 'reasonable doubt' about whether there is any deterrent effect of the death penalty, but profound uncertainty - even about its sign. |
| Keywords: | capital punishment; crime; death penalty; deterrence; execution; homicide; murder |
| JEL: | K14 K42 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5493&r=reg |
| By: | Ignacio Contín-Pilart (Universidad Pública de Navarra); Aad F. Correljé (Delft Technical University, and Clingendael International Energy Programme); M. Blanca Palacios (Universidad del País Vasco) |
| Abstract: | The restructuring of the Spanish oil industry produced a highly concentrated oligopoly in the retail gasoline market. In June 1990 the Spanish government introduced a system of ceiling price regulation in order to ensure that \"liberalization\" was accompanied by adequate consumer protection. This paper examines the pricing behavior of the retail gasoline market using multivariate error correction models over the period January 1993 (abolishment of the state monopoly)-December 2004. The results suggest that gasoline retail prices respond symmetrically to increases and decreases in the spot price of gasoline. However, one the ceiling price regulation was abolished, the \"collaboration\" between the government and the major operators, Repsol-YPF and Cepsa-Elf in order to control the inflation rate results in a slower rate of increase (decrease) of gasoline retail prices when gasoline spot prices went up (went down) than elsewhere in the European Union. Finally, retail margins were by the end of our timing period of analysis, as in the first years after the abolishment of the state monopoly, well above the European ones. |
| Keywords: | Competition, regulation, pricing behavior, gasoline market |
| JEL: | L11 L43 L51 L71 |
| Date: | 2006–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:ehu:biltok:200602&r=reg |
| By: | Rousseau Sandra (K.U.Leuven-Center for Economic Studies); Billiet Carole (Center for environmental law - University of Ghent) |
| Abstract: | We build a structural model to understand the fine set in court, which is described as the outcome of a two-stage game between defendant, public prosecutor and judge. The equilibrium fine depends on the harm caused, the costs to society and the probalility that the quilty party is punished. This fine influences the severity of prosecution and the defence expenditures. Next we empirically analyse the fines pronounced by the Court of Appeal in Ghent (Belgium) for water related criminal offences. We investigate whether the seriousness of the violation and past convictions, as well as some other characteristics, increase the penalty. |
| Date: | 2005–12 |
| URL: | http://d.repec.org/n?u=RePEc:ete:etewps:ete0510&r=reg |
| By: | Delhaye Eef (K.U.Leuven-Center for Economic Studies) |
| Abstract: | Speed limits are a well-known instrument to improve traffic safety. However, speed limits alone are not enough; there is need for enforcement of these limits. When one observes fine structures for speed offences one often finds two characteristics. First, the fine increases with the severity of the violation. Secondly, the fine depends on the speeders' offence history. We focus on this last point and confront two fine structures, both increasing with speed: a uniform fine and a differentiated fine, which depends on the offence history. Drivers differ in their propensity to have an accident and hence in their expected accident costs. Literature then prescribes that the fine for bad drivers should be higher than for good drivers. However, the government does not know the type of the driver. We develop a model where the number of previous convictions gives information on the type of the driver. We find that the optimal fine structure depends on the probability of detection and on the strength of the relationship between the type and having a record. We illustrate this by means of a numerical example. |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:ete:etewps:ete0601&r=reg |
| By: | Giuseppe Di Vita |
| Abstract: | In this article we apply and extend the model elaborated by Acemoglu and Verdier in their seminal paper (2000), to examine how the economy represented in their theoretical framework responds to an exogenous change in the agent's incentive. In particular, we focus on the consequences of a famous sentence of the Italian Supreme Court in plenary session, no. 500 of 1999, in which a revolutionary interpretation of civil liability rules is introduced, allowing private agents of our economy to appear before the court to demand reimbursement for the damages suffered as a consequence of illicit behavior of the public administration. This is one of the few cases in which the judex substantially makes law in a system of civil law, and the modification in incentive whether or not to be corrupted comes from an authority that is not part of the game (the jurisdictional power). Basing our affirmations on the model, we can say that corruption may have declined in Italy since the year 2000, as a result of a change in the incentives for both private agents and bureaucrats. |
| Keywords: | Bureaucrats, Government failure, Incentives, Market failure, Public goods |
| JEL: | K13 D23 H41 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.16&r=reg |
| By: | Toshihiro Okubo (IUHEI, The Graduate Institute of International Studies, Geneva) |
| Abstract: | This paper studies how market-specific entry sunk costs (regulation costs) affect the Home Market Effect (HME) with firm marginal costs heterogeneity. Our model is based on the Dixit-Stiglitz monopolistic competition model with firm heterogeneity plus regulation costs difference. We find that a regulation costs gap works as dispersion force by inducing a market potential gap, which reduces the HME and could cause the reverse HME or the anti-HME. The Home Market Magnification Effect (HMME) in terms of trade openness is hump-shaped, whereas the pro-HMME in terms of regulation costs coordination by technical barriers to trade (TBT) agreements can be found. Firm heterogeneity dampens the dispersion force by the regulation costs difference and thus works as an agglomeration force. Firm heterogeneity causes a perfect spatial sorting, in which a large country attracts only high productivity firms and vice versa. |
| Keywords: | regulation costs, market potential, perfect spatial sorting, home market effect, home market magnification effect, firm heterogeneity, technical barriers to trade |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heiwp02-2006&r=reg |
| By: | Michel Fok (UPR10 - Systèmes cotonniers en petits paysannats - http://www.cirad.fr/fr/pg_recherche/ur.php?id=36 - CIRAD) |
| Abstract: | Les transactions de produits de base, en particulier les produits agricoles d'exportation, sont scellées par des accords se référant à des règlements issus de chambres arbitrales à caractère privé (Systèmes de Règlements Privés ou SRP) et non pas les codes de commerce des pays ou la Convention sur la vente internationale des produits. Dans le cas du coton, ces chambres ont été établies dans la deuxième moitié du XIXème siècle de part et d'autre de l'Atlantique. Mieux encore, il est observé que le recours à l'arbitrage effectif est extrêmement rare. Ce phénomène témoigne de l'efficacité des SRP comme institutions de régulation des relations marchandes alors que ces dernières concernent des produits dont la qualité est variable et pas facile à objectiver. La communication proposée vise à ébaucher l'analyse des facteurs de cette efficacité en distinguant les éléments économiques des éléments sociologiques. L'analyse économique par les coûts de transaction permet de comprendre l'efficacité des SRP dans la réduction de ces coûts se portant sur des transactions se répétant dans le temps. Cependant cette efficacité économique ne vaut que si le mécanisme de réputation multilatérale, comme le souligne la théorie des jeux, est bien établie. La compréhension d'un tel mécanisme renvoie aux éléments sociologiques du groupe des acteurs impliqués. Pour préciser les rôles respectifs des éléments économiques et sociologiques, ainsi que leurs imbrications, l'analyse sera fondée sur l'approche comparée des SRP du coton des chambres arbitrales de New York et du Havre d'une part, et d'autre part des SRP du Havre se portant respectivement sur le coton et le café. |
| Keywords: | règlement privé; transaction; contrat; théorie des jeux; coton; régulation; arbitrage, qualité |
| Date: | 2006–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00008911_v1&r=reg |
| By: | W. Bentley MacLeod (Columbia University and IZA Bonn); Voraprapa Nakavachara (University of Southern California) |
| Abstract: | One of the most vexing public policy issues is the extent to which governments should intervene into private contractual relationships. The purpose of this paper is to explore both theoretically and empirically the extent to which such interventions may enhance efficiency. In the case of employment law, economists have traditionally taken the view that intervention, such as protection against wrongful discharge, simply undoes the original intent of the parties to the agreement. We find that both the good faith and the implied contract exceptions to employment at will may enhance employment in occupations characterized by high levels of investment. These results suggest that under the appropriate conditions courts may enhance the operation of a competitive market by setting appropriate default remedies for breach of contract. |
| Keywords: | employment law, wrongful discharge, private contracts, default rules |
| JEL: | J11 J21 J31 J61 K12 K31 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1970&r=reg |