nep-reg New Economics Papers
on Regulation
Issue of 2006‒05‒20
eleven papers chosen by
Christian Calmes
Universite du Quebec en Outaouais, Canada

  1. Stipulations, the consumer advocate and utility regulation in Florida By Stephen Littlechild
  2. Price Cap Regulation and Investment Incentives under Demand Uncertainty By Fabien A. Roques; Nicos S. Savva
  3. Analysing and Assessing Public Accountability. A Conceptual Framework By Bovens, Mark
  4. Promoting Accountability in Multi-Level Governance: A Network Approach By Harlow, Carol; Rawlings, Richard
  5. Modes of Governance: A Note Towards Conceptual Clarification By Treib, Oliver; Bähr, Holger; Falkner, Gerda
  6. An Assessment of Telecommunications Regulation Performance in the European Union By Antonio Afonso; Carla Scaglioni
  7. Human capital and corruption: a microeconomic model of the bribes market with democratic contestability By Pedro Cosme Costa Vieira; Aurora A.C. Teixeira
  8. Macroeconomic effects of banking secrecy when tax evasion is endogenous By Frode Brevik; Manfred Gärtner
  9. Friendly Fire? The Impact of US Antidumping Enforcement on US Exporters By Robert M. Feinberg; Kara M. Reynolds
  10. The Role of Path Dependence in the Development of U.S. Bankruptcy Law, 1880-1938 By Arslan Razmi; Robert A. Blecker
  11. Regulation in telecommunications : a cross approach between law and economics By Thierry Pénard (CREM-CNRS); Nicolas Thirion (University of Liege)

  1. By: Stephen Littlechild
    Abstract: Relatively little is known about the practice of settlement rather than litigation in US utility regulation, or about the activities of consumer advocates. This paper presents evidence from Florida. During 1976-2002, over 30 per cent of earnings reviews were settled by stipulations involving the Office of Public Counsel but only 5 per cent of other cases. Over three quarters of the rate reductions associated with earnings reviews derived from these stipulations, and in the decade 1976-86 the proportion was over 95 per cent. The average value of a rate reduction was seven times higher with a stipulation than without. Only 1 per cent of the rate increases associated with company requests derived from stipulations. In these few cases the stipulation typically provided for a lower proportion of the requested rate increase than a litigated outcome allowed (about one third compared to one half). This research suggests that settlements deserve consideration in utility regulation generally, even outside the US context.
    Keywords: stipulations, settlements, consumer advocate, regulation
    JEL: L51 L97 L94 L
    Date: 2006–05
  2. By: Fabien A. Roques; Nicos S. Savva
    Abstract: We study the effect of price cap regulation on investment in new capacity in an oligopolistic (Cournot) industry, using a continuous time model with stochastic demand. A price cap has two mutually competing effects on investment under demand uncertainty: it makes the option of deferring investment very valuable, but it also reduces the interest of strategic underinvestment to raise prices. We show that there exists an optimal price cap that maximizes investment incentives. As with deterministic demand, the optimal price cap is the clearing price of the competitive market. However, unlike the deterministic case, we show that such a price cap does not restore the competitive equilibrium; there is still under-investment. Sensitivity analyses and Monte Carlo simulations show that the efficiency of price cap regulation depends critically on demand volatility and that errors in the choice of the price cap can have detrimental consequences on investment and average prices.
    Keywords: real options, stochastic games, price cap regulation, electricity markets
    JEL: C73 D92 L51 L94
    Date: 2006–05
  3. By: Bovens, Mark
    Abstract: It has been argued that the European Union suffers from serious accountability deficits. But how can we establish the existence of accountability deficits? This paper tries to get to grips with the appealing but elusive concept of accountability by asking three types of questions, thus providing three types of building blocks for such an empirical study. First a conceptual one: what exactly is meant by accountability? Accountability is often used in a very broad sense, as a synonym for a variety of evaluative, but essentially contestable concepts, such as responsiveness, responsibility and effectiveness. In this paper the concept of accountability is taken in a much more narrow sense: a relationship between an actor and a forum, in which the actor has an obligation to explain and to justify his or her conduct, the forum can pose questions and pass judgment, and the actor may face consequences. The second question is an analytical one: what types of accountability are involved? On the basis of the narrow definition of accountability, a series of dimensions of accountability will be discerned, that can be used in the description of the various accountability relations and arrangements that can be found in the different domains of governance. The third question is an altogether different, evaluative question: how should we assess these accountability relations, arrangements and regimes? The paper provides three perspectives for the assessment of accountability relations: a democratic, a constitutional, and a cybernetic perspective. Each of these three perspectives may render different types of accountability deficits.
    Keywords: accountability; governance; democracy; political science; law; sociology
    Date: 2006–01–16
  4. By: Harlow, Carol; Rawlings, Richard
    Abstract: This paper seeks to address problems of accountability in systems of multi-level governance organized around networks, more particularly the system obtaining in the European Union. Discussion of these problems has previously focused on the ‘accountability deficit’ created when gaps are left by the accountability machinery of two of the several levels of government, supranational and national. This paper suggests that the hierarchical and pyramidal assumptions that presently underpin accountability theory in the EU context need to be tested and that new evaluative frameworks may be necessary. Using case studies of the Community Courts and European Ombudsman as examples, the paper suggests that new, flatter ‘accountability networks’ are emerging, composed of agencies specializing in a specific method of accountability, which come together or coalesce in a relationship of mutual dependency, fortified by shared professional expertise and ethos. These might ultimately be capable of providing effective machinery for accountability in network governance systems.
    Keywords: governance; accountability; European Court of Justice; European Ombudsman
    Date: 2006–04–07
  5. By: Treib, Oliver; Bähr, Holger; Falkner, Gerda
    Abstract: Recently, political science has seen an intense debate about the phenomenon of “governance”. The aim of this paper is to clarify the basic concepts that are at the heart of this debate, notably “governance” and “modes of governance”. It argues that most contributions share a common concern for the relationship between state intervention and societal autonomy. But different strands of the literature highlight different facets of this continuum. Existing understandings may be classified according to whether they emphasise the politics, polity or policy dimensions of governance. We use these categories to present a structured overview of different dimensions of modes of governance as they may be found in the literature. In this context, we argue that the classification of modes of governance as “old” or “new” is of little analytical value. Some modes of governance may have been relatively new in some empirical contexts. But the same governing modes may turn out to be long-established practice in other areas. Moving from individual dimensions to systematic classification schemes and typologies of modes of governance, the paper highlights a number of shortcomings of existing schemes and suggests an approach that could avoid these weaknesses. As a first step in this approach, we take a closer look at different policy properties of governance and develop a systematic typology of four modes of governance in the policy dimension: coercion, voluntarism, targeting and framework regulation.
    Keywords: governance; policy analysis; European law; open coordination; policy learning; national autonomy; interest intermediation; corporatism; pluralism; networks
    Date: 2005–11–17
  6. By: Antonio Afonso; Carla Scaglioni
    Abstract: We assess the performance of National Regulatory Authorities across 16 EU countries regarding economic regulation in telecommunications sector, by constructing a so-called Composite Regulatory Performance Indicator for regulatory aspects such as effectiveness of the national regulatory system, effectiveness of the dispute settlement body, general market access conditions and application of remedies in markets for narrowband voice, mobile, broadband and business services. This composite indicator is the output measure used in the DEA non-parametric approach. The computation of efficiency scores allows to rank the NRAs and to detect some room for improvement in terms of efficiency gains for each national authority.
    Keywords: technical efficiency; DEA; telecommunications; regulated industries; National Regulatory Authorities; European Union.
    JEL: C14 L51 L96 O52
  7. By: Pedro Cosme Costa Vieira (Faculdade de Economia, Universidade do Porto); Aurora A.C. Teixeira (CEMPRE, Faculdade de Economia, Universidade do Porto)
    Abstract: To overcome market failures society creates common laws that stimulate or penalize individual actions, the enforcement of which depends on the actions of public authorities who may be susceptible to corruption. Thus, a new market emerges where ‘influences’ are traded. Legislators have incentives to deviate from the goal of efficiency and produce laws that maximize the gains that can be expected from bribes. We model this behaviour for an autocracy versus a democracy, using a microeconomic framework. We assume that in an autocracy rulers have a monopoly over the bribes market, whereas in a democracy conflicting groups compete in the bribes market. In order to bring about the downfall of the incumbent rulers, these groups inform voters of the rulers' deviant actions so that, by a stochastic process, they convince voters of the existence of bribes and therefore gain their votes. The models constructed produce results that are compatible with the well-known stylized facts, namely that (1) in a democracy the level of corruption is lower than in an autocracy, although still positive, that (2) in environments where the level of human capital is higher (the proxy for the voters’ receptivity to the efforts of the opposition), regimes are closer to democracies and the level of corruption is lower, and that (3) the level of corruption is higher in more regulated economies.
    Keywords: Human capital; corruption; democracy; computational models
    JEL: J24 D73 C63
    Date: 2006–05
  8. By: Frode Brevik; Manfred Gärtner
    Abstract: We analyze a multi-country model in which a small group of countries adopts banking secrecy (BS) laws and a withholding tax. The other group doesn't. BS countries benefit in all relevant macroeconomic variables, including taxes and the provision of public goods. In non- BS countries most of the same variables deteriorate - when tax evasion is exogenous or its tax elasticity is moderate. When this elasticity is high, BS may drive these countries' tax rates down also, and income, consumption and wealth may rise. However, public-goods provision always deteriorates and welfare falls. We also argue that this case does not appear to be relevant empirically.
    Keywords: Banking secrecy, tax evasion, withholding tax, welfare effects
    JEL: E2 E62 F42 H2
    Date: 2006–05
  9. By: Robert M. Feinberg (Department of Economics, American University); Kara M. Reynolds (Department of Economics, American University)
    Abstract: While there has been considerable interest in recent years in the role of macroeconomic determinants of antidumping actions by the US and other traditional users, on the one hand, and the determinants of the growing global usage of this trade policy instrument, on the other, there has to date been no systematic exploration of the motivations for the significant number of foreign antidumping cases filed against US exporters. Several observers have remarked that the growing number of foreign users of antidumping might threaten US exporters, but the determinants of these actions have not been examined. That is the purpose of the following study. We find that these actions are in part explained by macroeconomic forces and as a response to US export superiority in particular sectors, however a significant role (and larger than found for global antidumping more generally) is played by retaliation for US trade policy actions.
    Keywords: antidumping, US exports, retaliation
    JEL: F13
    Date: 2006–04
  10. By: Arslan Razmi (Department of Economics, University of Massachusetts); Robert A. Blecker (Department of Economics, American University)
    Abstract: This paper tests for a ‘fallacy of composition’ by analysing the demand for exports of the 18 developing countries that are most specialised in manufactures in the markets of the 10 largest industrial countries. Estimated export equations (both time-series and panel data) suggest that most developing countries compete with other developing country exporters rather than with industrialised country producers. A smaller number of countries that export more high-technology products compete with industrialised country producers and also have higher expenditure elasticities for their exports. Thus, the fallacy of composition applies mainly to the larger group of countries exporting mostly low-technology products.
    Keywords: Developing country exports of manufactures, intra-developing country competition, fallacy of composition, real exchange rates, technological ladder, adding-up constraint.
    JEL: O19 O14 F14
    Date: 2006–04
  11. By: Thierry Pénard (CREM-CNRS); Nicolas Thirion (University of Liege)
    Abstract: Regulation in telecommunication industry is one of the most sophisticated sectorial regulation. Two main goals are targeted by public authorities. In one hand, the regulator is trying to build a competitive market to replace the historic monopolistic situation. Now the emphasis is less on the monopolization of the market by the former public operator and more on the risk of collective dominance by a dew dominant operators. In the second hand, the regulator is trying to promote other objectives such as protection of consumers, the territory balance, the defence of national champions. All these objectives can sometimes be in conflict. This paper analyses regulatory objectives and instruments, focusing on the economic and lax aspects.
    Keywords: Internet, Regulation, Law
    Date: 2006

This nep-reg issue is ©2006 by Christian Calmes. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.