|
on Regulation |
|
Issue of 2006‒08‒12
eleven papers chosen by Christian Calmes Universite du Quebec en Outaouais, Canada |
| By: | Yuliya Demyanyk |
| Keywords: | Bank supervision ; Banks and banking |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlsp:2006-01&r=reg |
| By: | Monique Ebell (Humboldt University of Berlin); Christian Haefke (Institute for Advanced Studies, Vienna, Instituto de Análisis Económico, CSIC and IZA Bonn) |
| Abstract: | We contribute to the growing literature which aims to link product market regulation and competition to labor market outcomes, in an attempt to explain the divergent US and continental European labor market performance over the past two decades. The main contributions of this paper are threefold. First, we show that the choice of bargaining regime is crucial for the effect of product market competition on unemployment rates, being substantial under collective bargaining and considerably more modest under individual bargaining. Since the choice of bargaining institution is so important, we endogenize it. We find that the bargaining regime which emerges endogenously depends crucially on the degree of product market competition. When product market competition is low, collective bargaining is stable, while individual bargaining emerges as the stable institution under high degrees of product market competition. This also allows us to link product market competition and collective bargaining coverage rates. Our results suggest that the strong decline in collective bargaining coverage and unionization in the US and UK over the last two decades might have been a direct consequence of the Reagan/Thatcher product market reforms of the early 80’s. Finally, we calibrate the model to assess the quantitative magnitude of our results. We find that moving from the US low regulation-individual bargaining economy to the EU high regulation-collective bargaining economy leads to a substantial increase in equilibrium unemployment rates from 5.5% to 8.9 % in the model economy. |
| Keywords: | product market competition, European Unemployment Puzzle, overhiring, wage bargaining |
| JEL: | E24 J63 L16 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2222&r=reg |
| By: | Alain de Serres; Shuji Kobayakawa; Torsten Sløk; Laura Vartia |
| Abstract: | This paper examines whether regulation that is more conducive to competitive and efficient financial systems has a significant positive impact on sectoral output and productivity growth in a sample of 25 OECD countries. More specifically, following a methodology used by Rajan and Zingales (1998), the paper tests whether industries that depend more heavily on external sources of funding tend to grow faster in countries that have more competition-friendly regulation in markets for banking services and financial instruments. The regulatory indicators are assembled from surveys conducted by the World Bank on regulations in banking and securities markets. They point to substantial variations in the stance of regulation across countries, in particular with respect to the broad rules underpinning securities market transactions. The empirical analysis indicates that financial system regulation matters for output growth both in a statistical and economic sense. <P>Réglementation des systèmes financiers et croissance économique <BR>L'objet de cette étude consiste à examiner, sur la base d'un échantillon de 25 pays de l'OCDE, dans quelle mesure une réglementation plus propice à des systèmes financiers concurrentiels et efficaces entraîne un effet positif significatif sur la croissance sectorielle. De manière plus spécifique, suivant une approche utilisée par Rajan et Zingales (1998), l'étude vérifie si les industries qui dépendent davantage des fonds externes croissent plus rapidement dans les pays dont la réglementation conduit à une concurrence plus vive sur les marchés des services bancaires et des instruments financiers. Les indicateurs de réglementation sont construits à partir d'information recueillie par la Banque Mondiale sur la réglementation dans le secteur bancaire et sur les valeurs obilières. Ils mettent en lumière des variations substantielles entre les pays, en particulier en ce qui a trait à la réglementation encadrant les transactions sur valeurs mobilières. L'analyse statistique indique que la réglementation des systèmes financiers affecte la croissance de la production de manière significative, à la fois au sens statistique et économique. |
| Keywords: | système financier, financial systems, external funding, financial regulation, sectoral growth, barrier to competition, investor protection, financement externe, réglementation financière, croissance sectorielle, entrave à la concurrence, protection des actionnaires |
| JEL: | G15 G18 G21 G28 O40 |
| Date: | 2006–08–02 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:506-en&r=reg |
| By: | Hasret Benar (Eastern Mediterranean University); Glenn Jenkins (Queen's University) |
| Abstract: | This paper considers alternative forms of regulation and taxation of the casino sector. The model considers the situation of a typical tourist destination country that is using casinos to attract and entertain foreign tourists. The objective is to invest in the sector efficiently while maximizing the amount of government revenue or profits accruing to the country. The regulator must determine how the price of gambling will be set, how many casinos will be allowed to enter the industry and the form and rates of taxation. Four alternative forms of regulation are considered: price regulation, state-owned monopoly, private monopoly and casino association regulation. Turnover taxes on the amount of funds gambled and also annual taxation of the fixed costs of the casinos are evaluated. Applications of the models are carried out for North Cyprus. The conclusion is that the economic efficiency costs and the revenue losses from the absence of effective regulation in these tourist destinations can be very substantial with welfare costs equal to the approximately 75 percent of the tax revenue generated by this sector. Furthermore it shows that while a tax on turnover can be efficient in the case of a competitive industry or a cartel association form of regulation, it will be distortionary if a multi-plant private monopoly is controlling the sector. In contrast a tax on fixed costs will lead to an efficient result in the case of a competitive industry, but it will lead to economic inefficiencies if the sector is regulated by a casino association that controls the number of casino entering the sector. |
| Keywords: | Casino regulation, taxation, state-monopoly, welfare cost |
| JEL: | H21 H32 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1088&r=reg |
| By: | Nancy L. Rose; Kira Markiewicz; Catherine Wolfram |
| Abstract: | Although the allocative efficiency benefits of competition are a tenet of microeconomic theory, the relation between competition and technical efficiency is less well understood. Neoclassical models of profit-maximization subsume static cost-minimizing behavior regardless of market competitiveness, but agency models of managerial behavior suggest possible scope for competition to influence cost-reducing effort choices. This paper explores the empirical effects of competition on technical efficiency in the context of electricity industry restructuring. Restructuring programs adopted by many U.S. states made utilities residual claimants to cost savings and increased their exposure to competitive markets. We estimate the impact of these changes on annual generating plant-level input demand for non-fuel operating expenses, the number of employees and fuel use. We find that municipally-owned plants, whose owners were for the most part unaffected by restructuring, experienced the smallest efficiency gains over the past decade. Investor-owned utility plants in states that restructured their wholesale electricity markets had the largest reductions in nonfuel operating expenses and employment, while investorowned plants in nonrestructuring states fell between these extremes. The analysis also highlights the substantive importance of treating the simultaneity of input and output decisions, which we do through an instrumental variables approach. |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:mee:wpaper:0418&r=reg |
| By: | Tooraj Jamasb; Michael Pollitt |
| Abstract: | The energy market liberalisation process in Europe is increasingly focused on electricity market integration and related cross border issues. This signals that the liberalisation of national electricity markets is now closer to the long-term objective of a single European energy market. The interface between the national electricity markets requires physical interconnections and technical arrangements. However, further progress towards this objective also raises important issues regarding the framework within which the integrated market is implemented. This paper reviews the progress towards a single European electricity market. We then discuss the emerging issues of market concentration, investments, and security of supply as well as some aspects of market design and regulation that are crucial for dynamic performance of a single European market. |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:mee:wpaper:0502&r=reg |
| By: | Paul L. Joskow |
| Abstract: | This chapter provides a comprehensive overview of the theoretical and empirical literature on the regulation of natural monopolies. It covers alternative definitions of natural monopoly, regulatory goals, alternative regulatory institutions, price regulation with full information, regulation with imperfect and asymmetric information, and topics on the measurement of the effects of price and entry regulation in practice. The chapter also discusses the literature on network access and pricing to support the introduction of competition into previously regulated monopoly industries. |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:mee:wpaper:0508&r=reg |
| By: | Stephen Ryan |
| Abstract: | The typical cost analysis of an environmental regulation consists of an engineering estimate of the compliance costs. In industries where fixed costs are an important determinant of market structure this static analysis ignores the dynamic effects of the regulation on entry, investment, and market power. I evaluate the welfare costs of the 1990 Amendments to the Clean Air Act on the US Portland cement industry, accounting for these effects through a dynamic model of oligopoly in the tradition of Ericson and Pakes (1995). Using a recently developed two-step estimator, I recover the entire cost structure of the industry, including the distribution of sunk entry costs and adjustment costs of investment. I find that the Amendments have significantly increased the sunk cost of entry. I solve for the Markov perfect Nash equilibrium (MPNE) of the model and simulate the welfare effects of the Amendments. A static analysis misses the welfare penalty on consumers, and obtains the wrong sign on the welfare effects on incumbent firms. |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:mee:wpaper:0510&r=reg |
| By: | Paul L Joskow |
| Abstract: | Over the last twenty years several network industries that evolved historically as either private or state-owned regulated vertically integrated monopolies have been privatized, restructured, and some vertical segments deregulated. These industries include telecommunications, natural gas, electric power, and railroads. The reform program typically involves the vertical separation (ownership or functional) of potentially competitive segments, which are gradually deregulated, from remaining vertical segments that are assumed to have natural monopoly characteristics and continue to be subject to price, network access, service quality and entry regulations. In several countries, an important part of the reform agenda has included the introduction of “incentive regulation” mechanisms for the remaining regulated segments as an alternative to traditional “cost of service” or “rate of return” regulation. The expectation was that incentive regulation mechanisms would provide more powerful incentives for regulated firms to reduce costs, improve service quality in a cost effective way, stimulate (or at least not impede) the introduction of new products and services, and stimulate efficient investment in and pricing of access to regulated infrastructure services. |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:mee:wpaper:0514&r=reg |
| By: | Joshua Linn |
| Abstract: | Recent environmental regulations have used market incentives to reduce compliance costs and improve efficiency. In most cases, the Environmental Protection Agency (EPA) selects an emissions cap using the predicted costs of reducing pollution. The EPA and other economists have used a "bottom-up" approach to predict the costs of such regulations, which forecast how every affected firm will respond. It is uncertain whether firms rely on the same predictions in making their compliance decisions. This paper uses stock prices to compare the predictions of the bottom-up studies with those of the affected firms. I focus on a recent tradable permit program, the Nitrogen Oxides Budget Trading Program (NBP). Started in 2004, the NBP requires electric generators in the Midwest and East to reduce their emissions or purchase permits from other firms. I compare utilities’ stock prices with the prices that would have occurred in the absence of the new regulation. I make this comparison by exploiting variation in the location of generators owned by utilities; the control group consists of utilities without any generators in the NBP. I estimate that investors expected the program to reduce profits by about $2 billion per year (2000 dollars). Investors expected the NBP to primarily affect coal generators, which have larger baseline emission rates than other fossil fuel generators. These results agree with previous studies that used the bottom-up approach. |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:mee:wpaper:0611&r=reg |
| By: | Yinhua Mai; Philip Adams; Mingtai Fan; Ronglin Li; Zhaoyang Zheng |
| Abstract: | In this study, we simulated three potential scenarios of an Australia-China Free Trade Agreement (FTA): removal of border protection on merchandise trade, investment facilitation, and removal of barriers to services trade. The analytical framework is a multi-country, multi-sector computable general equilibrium model, the Monash-Multi-Country (MMC) model. The FTA is found to deepen the two-country's economic partnership developed in the past fifteen or so years. On one hand, it sharpens the competitiveness of the Chinese manufacturing sector by reducing its costs of intermediate inputs. On the other hand, it raises the welfare of Australian consumers through improved terms of trade. In achieving a better utilisation of resources, adjustment of labour between sectors does occur. However, such adjustment is small in scale compared with what is occurring in the two countries amid globalisation without an FTA. |
| Keywords: | China, Australia, FTA, investment liberalisation |
| JEL: | D58 F15 F21 O53 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:cop:wpaper:g-153&r=reg |