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on Regulation |
| By: | Richard G. Newell; William A. Pizer |
| Abstract: | Seminal work by Weitzman (1974) revealed prices are preferred to quantities when marginal benefits are relatively flat compared to marginal costs. We extend this comparison to indexed policies, where quantities are proportional to an index, such as output. We find that policy preferences hinge on additional parameters describing the first and second moments of the index and the ex post optimal quantity level. When the ratio of these variables' coefficients of variation divided by their correlation is less than approximately two, indexed quantities are preferred to fixed quantities. A slightly more complex condition determines when indexed quantities are preferred to prices. Applied to climate change policy, we find that the range of variation and correlation in country-level carbon dioxide emissions and GDP suggests the ranking of an emissions intensity cap (indexed to GDP) compared to a fixed emission cap is not uniform across countries; neither policy clearly dominates the other. |
| JEL: | C68 D81 H41 Q54 Q58 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13991&r=reg |
| By: | Carlos Pestana Barros; Rui Cunha Marques |
| Abstract: | This paper analyzes regulation, ownership and unobserved managerial ability as factors affecting the performance of a representative sample of European airports by means of frontier models. The Alvarez, Arias and Greene (2004) frontier model is used. These airports are ranked according to their technical efficiency during the period 2001-2004 and homogenous and heterogeneous variables are disentangled in the cost function, which leads us to advise the implementation of common policies as well as policies by segments. Economic implications arising from the study are also considered. |
| Keywords: | Europe; airports; stochastic frontier models; regulation, ownership and unobserved managerial ability. |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp252008&r=reg |
| By: | Blauberger, Michael |
| Abstract: | Abstract European state aid control, a part of competition policy, typically follows the logic of negative integration. It significantly constrains the potential for Member States to distort competition by reducing their ability to subsidize industry. In addition, this paper argues, ambiguous Treaty rules and heterogeneous Member States' preferences have enabled the European Commission to act as a supranational entrepreneur, not only enforcing the prohibition of distortive state aid, but also developing its own vision of "good state aid policy. In order to prevent or to settle political conflict about individual decisions, the Commission has sought to establish more general criteria for the state aid which it still deems admissible. These criteria have been codified into a complex system of soft law and, more recently, hard state aid law. The Commission has thus created positive integration "from above" and increasingly influences the objectives of national state aid policies. Zusammenfassung Als Teil der europäischen Wettbewerbspolitik folgt die Beihilfekontrolle der Logik negativer Integration. Sie beschränkt die Möglichkeiten der Mitgliedstaaten erheblich, Unternehmen zu subventionieren und so den Wettbewerb zu verzerren. Darüber hinaus, so das Argument des Papiers, konnte die Europäische Kommission aufgrund auslegungsbedürftiger Vertragsregeln und angesichts heterogener Interessen der Mitgliedstaaten als supranationaler Entrepreneur handeln und hat dabei nicht nur das Verbot wettbewerbsverzerrender Beihilfen durchgesetzt, sondern auch ihre eigene Vision "guter" Beihilfepolitik entwickelt. Um politische Konflikte über Einzelentscheidungen zu vermeiden beziehungsweise beizulegen, hat die Kommission schrittweise allgemeine Kriterien für zulässige staatliche Beihilfen formuliert. Diese Kriterien wurden zu einem komplexen System von weichem und neuerlich auch hartem Beihilferecht ausdifferenziert. Die Kommission hat dadurch positive Integration "von oben" geschaffen und beeinflusst zunehmend die Ziele staatlicher Beihilfepolitik. |
| Keywords: | state aids; competition policy; industrial policy; European Commission; positive integration; negative integration; regulatory politics; soft law |
| Date: | 2008–04–28 |
| URL: | http://d.repec.org/n?u=RePEc:erp:mpifgx:p0081&r=reg |
| By: | Christian Bayer (IGIER – Università Commerciale Luigi Bocconi, Italy); Carsten Burhop (Max Planck Institute for Research on Collective Goods) |
| Abstract: | This paper proposes to exploit a reform in legal rules of corporate governance to identify contractual incentives from the correlation of executive pay and firm performance. In particular, we refer to a major shift in the legal and institutional environment, the reform of the German joint-stock companies act in 1884. We analyze a sample of executive pay for 46 firms for the years 1870 to 1911. In 1884, a law reform substantially enhanced corporate control, strengthened the monitoring incentives of shareholders, and reduced the discretionary power of executives in Germany. Pay-performance sensitivity decreased significantly after this reform. While executives received a bonus of about three to five per cent in profits before 1884, after the reform this parameter decreased to a profit share of about two per cent. At least the profit share that is eliminated by the reform must have been incentive pay before. This incentive mechanism was replaced by other elements of corporate governance. |
| Keywords: | pay-performance sensitivity, natural experiment, legal reform, corporate governance |
| JEL: | G30 J33 N23 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2008_11&r=reg |
| By: | Kozo Kiyota (Faculty of Business Administration, Yokohama National University and Gerald R. Ford School of Public Policy, University of Michigan); Tetsuji Okazaki (Faculty of Economics, University of Tokyo) |
| Abstract: | A number of studies have revealed that the effect of industrial policy on productivity growth is negative. Is this because industrial policy fails to control the activities of firms, or because it can effectively control them? This paper attempts to answer this question, using firm-level data from the cotton spinning industry in Japan for the period 1953-79. We find that industrial policy cut two ways during this period. Industrial policy effectively controlled the output of cotton spinning firms, which contributed to the establishment of a stable market structure both during and after the regulation of the industry. On the flip side, such policy constrained the reallocation of resources from less productive large firms to more productive small firms. Combined with the negative growth of large firms during this period, industrial policy resulted in negative sectoral productivity growth. |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2008cf563&r=reg |
| By: | Norbäck, Pehr-Johan; Persson, Lars |
| Abstract: | We construct a model where an entrepreneur could either innovate for entry or for sale. It is shown that increased product competition tends to increase the relative profitability of innovation for sale relative to entry. Increased competition reduces entrants' and acquirers' profits in a similar fashion, but also reduces the profit of non-acquirers. Therefore, incumbents' valuations of innovations are less negatively affected by increased competition than entrants' profits. This, in turn, implies that the incentive for innovation for sale can increase with increased competition. Finally, we show that a stricter, but not too strict, merger policy tends to increase the incentive for innovations for sale by ensuring the bidding competition for the innovation, without reducing the total rents for innovations too much. |
| Keywords: | Antitrust; Competition; Competition Policy; Entrepreneurs; Innovations |
| JEL: | L13 L40 O31 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6823&r=reg |