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on Regulation |
| By: | Silvester van Koten; Andreas Ortmann |
| Abstract: | Theory and empirics suggest that by curbing competition, incumbent electricity companies which used to be and here are referred to as Vertically Integrated Utilities (VIUs), can increase their profitability through combined ownership of generation and transmission and/or distribution networks. Because curbing competition is generally believed to be welfare-reducing, EU law requires unbundling (separation) of the VIU networks. However, the EU allows its member states the choice between incomplete (legal) and complete (ownership) unbundling. There is tantalizing anecdotal evidence that VIUs have tried to influence this choice through questionable means of persuasion. Such means of persuasion should be more readily available in countries with a more corrupted political culture. This paper shows that among the old EU member states (EU-15), countries which are perceived as more corrupt are indeed more likely to apply weaker forms of unbundling. Somewhat surprisingly, we do not obtain a similar finding for the new EU member states that acceded in 2004 (NMS-10). We provide a conjecture for this observation. |
| Keywords: | Electricity markets; regulation; vertical integration; corruption. |
| JEL: | K49 L43 L51 L94 L98 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp328&r=reg |
| By: | Jay P. Shimshack; Michael B. Ward |
| Abstract: | Economists generally view environmental enforcement as a tool to secure compliance with regulations. This paper demonstrates that credible enforcement significantly increases statutory overcompliance with regulations as well. We find that many plants with discharges typically below legally permitted levels reduce discharges further when regulators issue fines, even on other plants. Also, likely non-compliant plants often respond to sanctions by reducing discharges well beyond reductions required by law. Thus, increased enforcement generates substantial discharge reductions above and beyond those expected from simply deterring violations. |
| Keywords: | Over-compliance; Fines; Compliance; Enforcement; Regulation; Pollution Policy |
| JEL: | K42 Q58 Q53 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:tuf:tuftec:0706&r=reg |
| By: | Jamasb, T.; Pollitt, M. |
| Abstract: | The world-wide electricity sector reforms have led to a search for alternative and innovative approaches to regulation to promote efficiency improvement in the natural monopoly electricity networks. A number of countries have used incentive regulation models based on efficiency benchmarking of the electricity network utilities. While most regulators have opted adopted parametric and non-parametric frontier-based methods of benchmarking some have used engineering designed ‘reference firm’ or ‘norm’ models for the purpose. This paper examines the incentive properties and other related aspects of the norm model NPAM used in regulation of distribution networks in Sweden and compares these with those of frontier-based benchmarking methods. We identify a number of important differences between the two approaches to regulation benchmarking that are not readily apparent and discuss their ramifications for the regulatory objectives and process. |
| Keywords: | Electricity, regulation, benchmarking. |
| JEL: | L51 L94 L97 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0747&r=reg |
| By: | Jens Høj; Miguel Jimenez; Maria Maher; Giuseppe Nicoletti; Michael Wise |
| Abstract: | Based on 18 country reviews performed over the 2003-2005 period, this paper examines, the cross-country differences in policy approaches to product market competition and their consequences for product market rents. Against this background, the paper summarises OECD recommendations to further strengthen competition in various sectors and areas. These include: removing remaining barriers to trade and inward foreign direct investments; better securing deterrence of cartels through effective sanctions; facilitate market access to inherently competitive industries by easing zoning laws (the retail sector), abolishing reserved monopolies (sales of tobacco and alcohol), limiting the scope of trade associations’ self-regulation and easing residency or nationality requirements (professional services); meet competition challenges in network industries by facilitating the effective separation of monopoly components from competitive activities, reducing public ownership, clearly separating the government’s ownership and regulatory functions and creating the right incentives for investing in infrastructures. <P>Concurrence dans les marchés des produits des pays de l’OCDE : bilan et perspectives <BR>Ce document est basé sur 18 études économiques de l’OCDE menées entre 2003 et 2005. Il examine les différences entre pays dans les politiques de la concurrence ainsi que leur conséquences sur les caractéristiques des marchés de produits. Sur cette base, le document propose une synthèse des recommandations de l’OCDE pour renforcer la concurrence dans différents domaines et secteurs économiques. Celles-ci comprennent: la suppression des barrières commerciales et aux investissements directs étrangers encore en place; une meilleure dissuasion des stratégies de cartel à l’aide de sanctions plus efficaces; un accès plus aisé aux activités concurrentielles en assouplissant les régulations concernant l’aménagement du territoire (commerce de détail), la suppression de certains monopoles (vente de tabac et d’alcool), la limitation des prérogatives des associations professionnelles dans le domaine règlementaire ainsi que l’assouplissement des obligations de résidence ou de nationalité (professions libérales) ; et un meilleur essor de la concurrence dans les industries de réseau par la séparation des activités en situation de monopole des activités concurrentielles, la réduction du degré de contrôle public, notamment en distinguant clairement les fonctions de tutelle des fonctions de régulation sectorielle et en mettant en place les bonnes incitations à l’investissement en infrastructures. |
| Keywords: | network industries, industrie de réseau, trade policy, politique commerciale, competition law, droit de la concurrence, OECD countries, market imperfections, antitrust issues and policies, inherently competitive sectors, pays membres de l'OCDE, défaillances de marché, régulations anti-trust, secteurs concurrentiels |
| JEL: | D43 F13 K21 L4 L8 L9 |
| Date: | 2007–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:575-en&r=reg |
| By: | Sarkar, Prabirjit |
| Abstract: | The purpose of this paper is to analyze some leximetric data for a number of developed and less developed countries hitherto unavailable to examine (i) the changing state of shareholder protection and (ii) its connection with stock market development and capital accumulation. It finds a strong evidence of legal globalisation but no evidence of its favourable link with stock market development and capital formation. |
| Keywords: | leximetrics; shareholder protection; globalisation |
| JEL: | K22 O16 |
| Date: | 2007–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:5051&r=reg |
| By: | Arup Daripa (School of Economics, Mathematics & Statistics, Birkbeck) |
| Abstract: | We study alternative mechanisms facing adverse selection and moral hazard, as well as the problems of collusion and free-riding, which are often ignored in the literature. We derive the optimal monitoring mechanism and show that it solves free riding and collusion problems. However, with different types of agents, the optimal mechanism needs to also solve an “assignment problem,” which, coupled with the need to generate incentive for monitoring, prevents the optimal monitoring mechanism from attaining full second best efficiency. The paper then considers an alternative mechanism in which some agents are simply given gatekeeping powers: they can either allow or block any investment project. The mechanism allows rent extraction through side payments from investors to the gatekeepers. A gatekeeping mechanism with competing gatekeepers attains first best efficiency, and is also proof against collusion between investors and gatekeepers by construction. We show that the crucial issue for the success of monitoring is whether monitors can be penalized for false reporting. Without this assumption monitoring reduces to gatekeeping. Further, the crucial assumption for gatekeeping to succeed is that gatekeepers behave in a competitive manner. The results provide an explanation for the observed institutional choices: monitoring is typical in informal collectives, whereas government regulation of investment (licensing, issuing permits etc) leads naturally to gatekeeping. |
| Keywords: | Monitoring; Gatekeeping; Informal credit collective; Licensing; Collusion; Free riding in monitoring; Corruption |
| JEL: | O12 D82 D78 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:bbk:bbkefp:0715&r=reg |
| By: | David M. McEvoy; John K. Stranlund |
| Abstract: | Although the theoretical literature on the performance of voluntary approaches to environmental protection has progressed quite far in the last decade, no one has rigorously addressed the obvious point that even voluntary emissions control policies must be enforced. This paper examines the consequences of the need for costly enforcement of voluntary environmental agreements with industries on the ability of these agreements to meet regulatory objectives, the levels of industry participation with these agreements, and the relative efficiency of voluntary and regulatory approaches. We find that enforcement costs that are borne by the members of a voluntary emissions control agreement limit the circumstances under which an agreement can form in place of an emissions tax. However, if an agreement does form, member-financed enforcement induces greater participation than if compliance with the agreement could be enforced without cost to its members. Moreover, a voluntary emission control agreement with an industry can be a more efficient way to achieve an environmental quality objective than an emission tax, but only if: (1) the members of an agreement bear the costs of enforcing compliance with the agreement; (2) there exists member-financed agreements that reach the government’s environmental quality target while leaving the members of the agreement at least as well off as they would be under an emissions tax, and (3) the enforcer of the agreement has a significantly better monitoring technology or a higher sanction available to it than the government. Key Words: |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:07-15&r=reg |
| By: | Hylke, VANDENBUSSCHE (UNIVERSITE CATHOLIQUE DE LOUVAIN - Department of Economics and CORE, KULeuven, CEPR); Tilburg University and CentER |
| Abstract: | A recent phenomenon is the rapid spread of Antidumping (AD) laws mainly amongst developing countries Ôi.e. China, India, Mexico). Between 1980 and 2003 the number of countries in the world with an AD law more than doubled going from 36 to 97 countries. This proliferation of trade protection laws amongst developing countries is likely to have substantial implications for trade as recently shown by Vandenbussche and Zanardi (2007). The purpose of this paper is to use a duration analysis to investigate the determinants leading a country to adopt an AD law. We also analyze the related question of what explains the heterogeneity between countries that can be observed in terms of the time between adoption and their first use of the AD law. We find strong evidence that retaliatory motives are at the heart of the proliferation decision as countries that were targeted by AD actions of traditioal users in the past (i.e., US, EU) are much more likely to adopt an AD law. Also, our evidence suggests that past trade liberalization substantially increases the probability of a country to adopt an AD law. In addition, we find that the size of the chemicals sector and the extent of steel imports are positively correlated with the probability to adopt. The amount of inward FDI on the other hand has a clear negative effect on the probability to adopt. While short term macroeconomic factors like GDP growth and exchange rate volatility seem to matter less for adoption, asymmetric regional shocks and the development level of a country seem to raise the probability of starting to use an AD law. Our results are robust to several specifications of duration models. |
| Keywords: | Antidumping, trade liberalization, GATT/WTO |
| JEL: | F13 F14 |
| Date: | 2007–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2007027&r=reg |
| By: | Hoekman, Bernard; Mattoo, Aaditya; Sapir, André |
| Abstract: | Little progress has been made since the creation of the WTO in expanding and deepening the coverage of services liberalization commitments. This paper identifies and discusses five hypotheses that may explain the absence of dynamism: (i) technological changes allow ever more services to be traded cross-border unaffected by policy; (ii) strong incentives to pursue liberalization on an autonomous basis (unilaterally); (iii) perceptions that bilateral or regional cooperation are a good substitute for the WTO; (iv) standard political economy factors such as adjustment costs and resistance by incumbents to erosion of rents; and (v) concerns that the WTO will affect the ability of regulators to enforce national norms. We argue that all of these explanations play a role, and that some of these factors significantly impede the scope for reciprocal exchanges of ‘concessions’—the engine of WTO negotiations. |
| Keywords: | Doha Round; GATS; political economy; trade in services; trade negotiations; WTO |
| JEL: | F13 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6457&r=reg |
| By: | Weingast, Barry R.; Webb, Steven B.; Wallis, John Joseph; North, Douglass C. |
| Abstract: | The upper-income, advanced industrial countries of the world today all have market economies with open competition, competitive multi-party democratic political systems, and a secure government monopoly over violence. Such open access orders, however, are not the only norm and equilibrium type of society. The middle and low-income developing countries today, like all countries before about 1800, can be understood as limited access orders that maintain their equilibrium in a fundamentally different way. In limited access orders, the state does not have a secure monopoly on violence, and society organizes itself to control violence among the elite factions. A common feature of limited access orders is that political elites divide up control of the economy, each getting some share of the rents. Since outbreaks of violence reduce the rents, the elite factions have incentives to be peaceable most of the time. Adequate stability of the rents and thus of the social order requires limiting access and competition-hence a social order with a fundamentally different logic than the open access order. This paper lays out such a framework and explores some of its implications for the problems of development today. |
| Keywords: | Corporate Law,Labor Policies,Public Sector Corruption & Anticorruption Measures,E-Business,Disability |
| Date: | 2007–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4359&r=reg |
| By: | Josef, KONINGS (KULeuven Department of Economics); Hylke, VANDENBUSSCHE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics) |
| Abstract: | We analyze the relationship between Antidumping (AD) Protection and the productivity of EU domestic firms in import-competing industries. For this purpose we identify a panel of domestic firms between 1993 and 2003 that a some point during this period are affected by AD initiations. Using a difference-in-difference approach, we find that AD measures result in improvements of measured productivity for domestic firms. Total Factor Productivity (TFP) of protected firms increases by 2% in the short-run and by 5% to 13% in the long-run. However, there is substantial heterogeneity across firms. The effect of protection depends on the initial Òdistance-to-the-frontier firmÓ in the industry. While protection raises TFP of ÒlaggardÓ domestic firms, it lowers TFP for ÒefficientÓ firms that operate close to the efficiency frontier. These results are consistent with recent theoretical work supporting the view that trade policy, under certain conditions, can induce technological catching-up. While this paper evaluates the effectiveness of AD policy it does not engage in a welfare analysis. |
| Date: | 2007–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2007028&r=reg |