nep-reg New Economics Papers
on Regulation
Issue of 2008‒11‒18
thirteen papers chosen by
Christian Calmes
Universite du Quebec en Outaouais

  1. The Cost of Biotechnology Regulation in the Philippines By Bayer, Jessica C.; Norton, George W.; Falck-Zepeda, Jose
  2. Uncertainty aversion in Australian regulation of agricultural gene technology By Gray, Emily; Ahmadi-Esfahani, Fredoun
  3. Correct (and misleading) argument for using market-based pollution control policies By Karp, Larry
  4. Why the European Securities Market is Not Fully Integrated By Alberto Giovannini
  5. Monitoring of compliance in Australian conservation contracts By Crowe, Bronwyn; White, Ben; Pannell, Dave; Lindner, Bob
  6. Structural Change in the Meat and Poultry Industry and the Pathogen Reduction Hazard Analysis Critical Control Point Rule By Ollinger, Michael
  7. On the optimal design of income support and agri-environmental regulation By Bontems, Philippe
  8. Statutory Rewards to Environmental Self-Auditing: Do They Reduce Pollution and Save Regulatory Costs? Evidence from a Cross-State Panel By Guerrero, Santiago; Innes, Robert
  9. Optimal Coverage of Installations in a Carbon Emissions Trading Scheme (ETS) By Sanderson, Todd; Ancev, Tiho; Betz, Regina
  10. The Flattening Firm and Product Market Competition: The Effect of Trade Liberalization By Maria Guadalupe; Julie Wulf
  11. Australian Consumers' Concerns and Preferences for Food Policy Alternatives By Umberger, Wendy J.; Scott, Emily M.; Stringer, Randy
  12. Does Politics Matter in EPA's Monitoring Activities? Evidence from Facility Level Data on Enforcement of Clean Air Laws By Innes, Robert; Mitra, Arnab
  13. Individual Enforcement Rights in International Sovereign Bonds By Häseler, Sönke

  1. By: Bayer, Jessica C.; Norton, George W.; Falck-Zepeda, Jose
    Abstract: This paper identifies direct costs and opportunity costs of bio-safety regulation for four transgenic products in the Philippines: Bt eggplant, Bt rice, ringspot-virus resistant papaya, and virus resistant tomatoes. It finds that direct regulatory costs while significant, are generally smaller than the research costs for technology development. However, both research and regulatory costs are overshadowed by even a relatively brief delay in product release, which may occur due to unexpected regulatory delays.
    Keywords: Food Consumption/Nutrition/Food Safety, Research and Development/Tech Change/Emerging Technologies,
    Date: 2008
  2. By: Gray, Emily; Ahmadi-Esfahani, Fredoun
    Abstract: There is potential for over-provision of environmental harms and under-provision of environmental benefits associated with GM crops. As a result, strong public regulation is needed to ensure that full social values are considered. However, one reason for opposition to GM crops is a lack of public trust in regulatory institutions and science, and the limited opportunities afforded to public-participation and nonscientific concerns. We aim to demonstrate the trade-off between social cost and managing the risks of gene flow arising from environmental release of GM canola in Australia, using the framework of a probabilistic risk assessment and safety-rule decision mechanism.
    Keywords: safety-rule, uncertainty, biotechnology regulation, canola, Crop Production/Industries, Institutional and Behavioral Economics, Research and Development/Tech Change/Emerging Technologies, Risk and Uncertainty,
    Date: 2008
  3. By: Karp, Larry
    Abstract: One argument in favor of market based pollution control policies is sometimes exaggerated, and a different argument is usually ignored. Regardless of whether investment is fixed or endogenous, market based policies might lead to a higher or lower equilibrium abatement compared to the level under command and control policies. Therefore, economists should be cautious about trying to convince anti-market environmentalists of the benefit of market based policies on the grounds that these promote environmental goals. However, market based policies reduce regulatory uncertainty. Under command and control emissions policies, there are multiple rational expectations competitive equilibria at the investment stage. From the standpoint of individual firms, this multiplicity looks like regulatory uncertainty. Market based policies eliminate this uncertainty. These results hold in an environment with common knowledge about market fundamentals. In a global games setting the unique investment equilibrium under command and control emissions policies is constrained efficient.
    Keywords: tradable permits, coordination games, multiple equilibria, global games, regulatory uncertainty, climate change policies, California AB32, Environmental Economics and Policy, C79, L51, Q58,
    Date: 2008
  4. By: Alberto Giovannini
    Abstract: I describe the challenge of fully integrating securities markets in Europe by integrating the clearing and settlement functionalities. The initial condition is characterized by a multitude of standards, conventions, regulation and laws, which are inconsistent with a barrier-free post-trading environment. In addition, the current providers of post-trading services are mostly for-profit monopolies. The EU reform strategy is discussed in detail, and its performance so far is assessed. I argue that the special features of the post-trading industry may help understand the disappointing progress so far.
    JEL: F3 F36 F59 G15 G2
    Date: 2008–11
  5. By: Crowe, Bronwyn; White, Ben; Pannell, Dave; Lindner, Bob
    Abstract: Government and non-government conservation agencies have long-term goals and objectives to provide environmental services, such as conserving the biodiversity of Australian native vegetation. In addition to national parks and reserves, private lands are often included in conservation programs to achieve these objectives. Formal contracts are entered into between the private landholder and the conservation agency to provide environmental services, or more commonly to provide inputs that are likely to lead to environmental services. The paper examines the costs and benefits of monitoring these conservation contracts when biodiversity change is stochastic.
    Keywords: conservation, compliance, monitoring, enforcement, environmental regulation, Environmental Economics and Policy,
    Date: 2008
  6. By: Ollinger, Michael
    Abstract: This paper uses plant-level micro-data covering the 1987-2002 and a translog cost function to estimate long-run costs in the meat and poultry industry in order to evaluate the impact of the Pathogen Reduction Hazard Analysis Critical Control Point Rule on cattle, hog and chicken slaughter and prepared pork products and sausage-making industries. Results suggest that costs rose in the cattle and hog slaughter and prepared pork products industries and the cost shares of meat declined and of labor and capital rose. There is little evidence that events over the period favored large or small plants.
    Keywords: food safety, structural change, regulation, industrial organization, Agribusiness, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, Industrial Organization,
    Date: 2008–07
  7. By: Bontems, Philippe
    Abstract: In this paper, we develop a model of regulation for a set of heterogenous farmers whose production yields to environmental externalities. The goal of the regulator is first to offer some income support depending on collective preferences towards income redistribution and second to internalize externalities. The optimal policy is constrained by the information available. We first consider the second best where the regulator is able to observe all individuals decisions in terms of inputs and individual profit, but not the individual farming labor supply. We characterized the generalized transfer in function of the desire to redistribute and the underlying characteristics of the production process. In a second step, we assume that the regulator has only information on aggregate consumption of inputs and hence can only tax/subsidy linearly inputs and output. However, because the accounting profit remains observable, a non linear transfer of profit is still part of the optimal policy. In the last part of the paper, we endogenize the market price of land and examine how the optimal policy should be modified.
    Keywords: asymmetric information, agricultural policy, agri-environmental policy, income support, Agricultural and Food Policy, Environmental Economics and Policy, Q18, Q12, Q58,
    Date: 2008
  8. By: Guerrero, Santiago; Innes, Robert
    Abstract: State-level statutes provide firms that engage in environmental self-audits, and that self-report their environmental violations, with a variety of different regulatory rewards, including "immunity" from penalties and "privilege" for information contained in self-audits. This paper studies a panel of State-level industries from 1989-2003, in order to determine the effects of the different statutes on toxic pollution and government inspections. We find that, by encouraging self-auditing, privilege and limited immunity protections tend to reduce pollution and government enforcement activity; however, more sweeping immunity protections, by reducing firms' pollution prevention incentives, raise toxic pollution and government inspection oversight.
    Keywords: Environmental Economics and Policy,
    Date: 2008
  9. By: Sanderson, Todd; Ancev, Tiho; Betz, Regina
    Abstract: Trading schemes for emission allowances have become a panacea for nations aspiring to reduce their aggregate emissions of greenhouse gases from industry in a cost-effective manner. The contention of this paper is that an emissions trading scheme (ETS) should not be based on blanket coverage of installations on a downstream level, but should rather be designed to include some installations, and from some industrial sectors. In the case of an ETS there are high costs of administration, monitoring and transacting imposed on the installations covered. These costs are supposed to be more than offset by the cost savings realised through trading in the market for emission allowances. However, the paper shows that not all installations can fully offset administrative costs, and are therefore exposed to higher cost compared to a situation under an alternative instrument (e.g. standard). The paper formulates a conceptual framework for analysing overall cost and benefits from an ETS in the light of administration and transactions costs. It theoretically establishes a threshold point for optimal coverage of installations on a downstream level. The paper uses data from EU ETS to empirically determine optimal coverage for selected sectors. The results indicate that blanket coverage is more costly than the determined optimum coverage plan.
    Keywords: Climate Change, Emissions Trading Scheme, European Union, Marginal Abatement Costs, Environmental Policy, Environmental Economics and Policy, International Relations/Trade,
    Date: 2008
  10. By: Maria Guadalupe; Julie Wulf
    Abstract: This paper establishes a causal effect of competition from trade liberalization on various characteristics of organizational design. We exploit a unique panel dataset on firm hierarchies (1986-1999) of large U.S. firms and find that increasing competition leads firms to become flatter, i.e., (i) reduce the number of positions between the CEO and division managers (DM), (ii) increase the number of positions reporting directly to the CEO (span of control), (iii) increase DM total and performance-based pay. The results are generally consistent with the explanation that firms redesign their organizations through a set of complementary choices in response to changes in their environment.
    JEL: L2 M2 M52
    Date: 2008–11
  11. By: Umberger, Wendy J.; Scott, Emily M.; Stringer, Randy
    Abstract: Results from a 2007 Australian consumer survey conducted at a large farmers market are used to explore the hypothesis that consumers who are more concerned about certain types of food labeling information, particularly information related to food production attributes, are more likely to support policies which help develop farmers markets and support mandatory labeling policies. Product information and attributes such as Country-of-Origin, No Growth Hormones Used, Free Range and Animals Treated Humanely and Environmentally-friendly appear to be very important to consumers. It appears that respondents want increased government involvement in developing consistent food labelling standards for these attributes and support mandatory food labelling policies, however, respondents are split between whether third-parties or the Australian government should oversee regulation of the program. Some respondents appear to view a mandatory labelling policy as a method to improve competitiveness and sustainability of small food producers who want to use labelling to differentiate themselves. Respondents also tended to support the government subsidizing the development of farmers markets. Respondents viewed FM as an opportunity to gain additional information or purchase foods that have credence attributes such as pesticide-free. Thus, policies supporting FM may help alleviate market failures related to asymmetric information and lack of choice.
    Keywords: market failure, consumers, farmers markets, labelling, Agricultural and Food Policy,
    Date: 2008
  12. By: Innes, Robert; Mitra, Arnab
    Abstract: This paper studies the potential effects of political pressure on environmental law enforcement in the Unites States. Prior work, most notably the key works of Deily and Gray, document the sensitivity of U.S. environmental enforcement to economic circumstances of regulated firms. However, the sensitivity of environmental enforcement may be motivated not only by cost-benefit criterion (economic costs of environmental enforcement against troubled firms in high unemployment areas are high) but also by political considerations, and most likely both. We are interested in identifying whether political influence directly affected environmental enforcement during the years 1990-2005, which cover most part of the Bush and Clinton administrations. Using political, demographic and income related data from various sources and mapping them with EPA's data on facility level inspection, we find evidence that political processes at the local, state and federal level do matter for facility level inspection.
    Keywords: Environmental Economics and Policy,
    Date: 2008
  13. By: Häseler, Sönke
    Abstract: Sovereign bonds are notoriously hard to enforce. What little rights bondholders have can be vested either collectively or individually. It seems that investors, particularly in the US market, traditionally had a preference for the latter, which hindered financial market reform projects, such as the universal adoption of collective action clauses in 2003. This paper uses a range of theoretical approaches to discuss whether it is indeed in the bondholder’s collective interest to be allowed to individually sue and attach the debtor country’s assets following a default. Furthermore, it examines the landmark case of Elliott Associates v. Peru to attempt a quantitative assessment of just how much sovereign bondholders actually value individual enforcement rights. I find that even the single most important event to reinforce creditor rights in recent years had no noticeable impact on bond prices.
    Keywords: sovereign debt; collective action clauses; fiscal agency agreements; trustees
    JEL: F34 K12
    Date: 2008–11–10

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