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on Regulation |
| By: | Ziver Olmez (Independent researcher) |
| Abstract: | Since privatization, the 14 UK electricity distribution network operators (DNOs), being natural monopolies, have been subject to RPI-X regulation by the UK regulator (Ofgem). Mergers between the 14 DNOs have formed 7 identifiable ownerships (management teams). It is argued in this research that Ofgem has not used a sufficiently robust approach to benchmarking, and has therefore failed to accurately assess network efficiency gains. Furthermore, Ofgem has used invalid arguments against further mergers. By using more informative panel datasets, as well as a more robust estimation technique (Stochastic Frontier Analysis), this research reveals two crucial facts. Firstly, there is almost no more room for the DNOs in question to become more cost efficient, as the industry is operating close to minimum efficient scale. This suggests that Ofgem needs to widen its scope of benchmarking and regulation (e.g. quality-incorporated benchmarking). Secondly, there seems to be no increasing returns to scale in the industry, a more appropriate reason why further mergers should not take place. |
| Keywords: | Ofgem, Frontier Analysis, Mergers. |
| JEL: | L51 L52 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:sur:seedps:122&r=reg |
| By: | Chen, Yu-Fu (BOFIT); Funke, Michael (BOFIT) |
| Abstract: | In January 2008, China adopted a new labour contract law. This new law represents the most significant reform to the legislation on employment relations in mainland China in more than a decade. The paper provides a theoretical framework on the inter-linkages between labour market regulation, option value and the choice and timing of employment. All in all, the paper demonstrates that the Labour Contract Law in its own right will have only small impacts upon employment in the fast-growing Chinese economy. Rather, induced increasing unit labour costs represent the real issue and may reduce employment. |
| Keywords: | China; labour contract law; real options; employment |
| JEL: | C61 D81 D92 J23 |
| Date: | 2009–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2008_029&r=reg |
| By: | Julien Chevallier (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre) |
| Abstract: | Stemming from politically given market imperfections in a tradable permits system, this paper develops a Stackelberg game with two types of non-cooperative agents to describe how a large -potentially dominant- agent may exercise market power at the expense of a competitive fringe. In a dynamic framework with full forward and backward temporal flexibility (i.e. 1:1 Intertemporal Trading Ratio), this intra-industry model then suggests an optimal allocation criterion for grandfathered permits based on recent emissions. This paper contributes to the permit trading literature by shedding some light on the decision to allow banking and borrowing, a debate which is typically overlooked by the debate to introduce the permits market itself among other environmental regulation tools. Provisional results are presented under perfect information. |
| Keywords: | emissions trading;banking;borrowing;market power;differential game |
| Date: | 2009–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00124713_v1&r=reg |
| By: | Stegaroiu, Valentin |
| Abstract: | Each Member of the European Union (EU) has designed and perfected its own pension scheme as a necessary evolution of direct development taking into account the arguments that have led to such developments. Currently, due to these issues, not at all simple, in these states, there is a growing concern for finding common solutions to harmonization these systems as a direct consequence of the free movement of persons. |
| Keywords: | European social policy; social security; European regulation; social security; social benefits |
| JEL: | F15 O11 H55 F02 F59 F53 O52 |
| Date: | 2009–01–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:12890&r=reg |
| By: | Ramprasad Sengupta |
| Abstract: | An analysis of the economic implication of judicial activism of the apex court of India in the regulation of automotive air pollution is analysed. It estimates the health damage cost of urban air pollution for 35 major urban agglomerations of India arising from automotive emissions and the savings that can be achieved by the regulation of fuel quality so as to conform to the Euro norms. It has used the results of some US based study and has applied the transfer of benefit method from the US to the Indian situation for the purpose. The paper finally makes a benefit cost analysis of refinery upgradation for such improvement of fuel quality. |
| Keywords: | fuel quality, health, urban pollution, air, cost benefit analysis, US, Indian, ecoomic implication, automotive, Euro, , |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:1841&r=reg |
| By: | Christian Calmès (Département des sciences administratives, Université du Québec (Outaouais), et LRSP); Raymond Théoret (Département de stratégie des affaires, Université du Québec (Montréal), et Chaire d'information financière et organisationnelle) |
| Abstract: | This paper revisits the impact of OBS activities on Canadian banks risk-return trade-off. Recent studies (Stiroh and Rumble 2006, Calmès and Liu 2007) suggest that increasing OBS activities do not necessarily yield straightforward diversification benefits. However, adding a risk premium to earlier accounting returns models by resorting to an ARCH-M procedure, an updated sample reveals that the Canadian banks risk-return trade-off displays a structural break, around 1997. In the second subperiod (1997-2007) of our sample, we find that the share of noninterest income no longer negatively impacts banks returns. Relatedly, we find that a risk premium emerges while, in the first period (1988-1996), the volatility variable is not significant in any returns equations. Our results are thus consistent with a maturation process story. |
| Keywords: | Regulatory changes; Noninterest income; Diversification; Structural break; Risk premium. |
| JEL: | G20 G21 |
| Date: | 2009–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:pqs:wpaper:022009&r=reg |
| By: | Joseph E. Harrington, Jr. |
| Abstract: | If an antitrust authority chooses policies to maximize the number of successfully prosecuted cartels, when do those policies also serve to minimize the number of cartels that form? When the detection and prosecution of cartels is inherently difficult, we find that an antitrust authority¡¯s policies minimize the number of cartels, as is socially desirable. But when the detection and prosecution of cartels is not difficult, an antitrust authority is not aggressive enough in that it prosecutes too few cartel cases. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:jhu:papers:549&r=reg |
| By: | Drew Dahl (Department of Economics and Finance, Utah State University); Douglas D. Evanoff (Federal Reserve Bank of Chicago); Michael F. Spivey (Clemson University) |
| Abstract: | Significant disagreement exists as to whether the Community Reinvestment Act (CRA) influences the lending behavior of financial institutions. We conduct empirical tests on the lending of banks directly affected by regulatory enforcement of the CRA—those experiencing upgrades or downgrades in their CRA ratings— to evaluate whether the ratings changes were associated with lending behavior. Results indicate that: 1) upgraded banks had higher relative levels of lending than did downgraded banks, which is consistent with a hypothesis that banks adjust lending to satisfy CRA requirements; 2) downgraded banks show little evidence of increased lending following a downgrade despite apparent incentives for them to do so in an attempt to improve their CRA ratings; and 3) both downgraded and upgraded banks increased lending following implementation of new CRA regulations intended to more closely align CRA ratings with actual lending outcomes. |
| Date: | 2009–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:uth:wpaper:200806&r=reg |
| By: | Hong-il Yoo (School of Economics, University of New South Wales) |
| Abstract: | While smoking remains the leading preventable cause of death in Australia, existing policy options, except for bans on smoking at public places, seem to have limited scope for expansion. Eight new smoking bans, introduced in six different Australian jurisdictions over 2003 and 2005, provide a basis for evaluation. The analysis extends a popular two-part model of smoking behaviour by GLM and correlated random effect models. Difference-in-differences estimation using 4 waves of the Household, Income, Labour Dynamics Australia Survey indicates that neither the probability nor the intensity of smoking was affected. The results are robust to alternative specifications and estimation methods. |
| Keywords: | smoking; smoke-free law; tobacco regulation |
| JEL: | I12 I18 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2008-24&r=reg |
| By: | Recuero Virto, Laura; Gasmi, Farid; Noumba Um, Paul |
| Abstract: | This paper discusses the relationship between the quality of political and economic institutions and the performance of the infrastructure industries reform process in developing countries. Our point of departure is that, when thinking about this relationship, it is necessary to take into account the specific features of these countries’ economies (Gasmi and Recuero Virto, 2005, Laffont, 2005). Based on two econometric analysis of time-series-crosssectional data on the telecommunications sector, we present the empirical findings and policy implications pertaining two issues (Gasmi et al., 2006, Gasmi and Recuero Virto, 2007). The first issue concerns the impact of the quality of institutions on the performance of regulation. Our review points to the fact that political accountability of institutional systems is a key determinant of regulatory performance. The second issue relates to the factors that shape the sectorial reforms themselves and the impact on these reforms on the development of the industry. Our main conclusion is that countries’ institutional risk and financial constraints are among the major factors that explain which reforms are actually implemented. |
| Keywords: | Political accountability; reforms; infrastructure industries; developing countries |
| JEL: | L96 L51 H11 L97 C23 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:12881&r=reg |
| By: | Ronald E. Shrieves (University of Tennessee); Drew Dahl (Department of Economics and Finance, Utah State University); Michael F. Spivey (Clemson University) |
| Abstract: | We hypothesize that features of European capital markets used to distinguish market reliance and investor protection have predictably influenced emerging national differences in bank capitalization, growth, and choice of income-producing activities. We characterize countries' capital regimes as more or less "equity-friendly" or "debt-friendly" based upon their reliance on equity and credit markets and the extent to which their legal frameworks protect shareholders and creditors. Using bank-level data from 13 European countries, 1998 to 2004, we find evidence of positive associations between “equity-friendly” market features and, respectively, bank capitalization, bank asset growth and the relative emphasis on bank lending to its customers. Support is also provided for hypotheses that “credit-friendly” capital regimes convey advantages reflected in higher rates of growth in assets and greater emphasis on lending to customers. Our results suggests that integration of European banking markets is mitigated by other, relatively static, features of the equity and debt markets on which banks rely. |
| Keywords: | international banking, market integration, shareholder protection |
| JEL: | F33 F36 G21 G28 G32 G38 |
| Date: | 2009–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:uth:wpaper:200807&r=reg |