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on Regulation |
| By: | Beschorner, Patrick Frank Ernst |
| Abstract: | Under ex ante access regulation entrants often claim that access fees are excessive. I show that this is only the case if further entry is admitted. If the entrant is protected from further entry it would agree with the incumbent upon a strictly positive access fee which may exceed the efficient level. Ex post regulation facilitates this type of collusion and should be abandoned. |
| Keywords: | entry deterrence, access regulation, network infrastructure, vertical differentiation |
| JEL: | K21 K23 L42 L51 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7473&r=reg |
| By: | Michele Fratianni (Indiana University, Kelly School of Business, Bloomington US, Univ. Plitecnica Marche - Dept of Economics, MoFiR) |
| Abstract: | The historical record shows that financial crises are far from being a rare a phenomenon; they occur often enough to be considered part of the workings of finance capitalism. While there is no single hypothesis that can best explain all crises, the implications of the credit boom-and-bust hypothesis, supplemented with asymmetric information, are consistent with the onset and development of many crises, including the current subprime crisis. Governments have reacted to crises by erecting a vast and growing safety net. In turn, to minimize their risk exposure, they have also put in place expansive systems of regulation and supervision. The unwinding of the current crisis will mark a big enlargement of the safety net and moral hazard, as well as a predictable flurry of policy proposals aimed at closing past regulatory loopholes. The maintained hypothesis is that regulatory and market failures are inexorably intertwined. |
| Keywords: | Bailout, Credit, Crisis, Money, Moral hazard, Regulation, Safety net, Subprime |
| JEL: | E58 F30 G21 N20 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wmofir:5&r=reg |
| By: | Silvia Giacomelli (Banca d'Italia) |
| Abstract: | This paper analyzes the evolution of the natural gas distribution sector in Italy from the 2000 reform with the aim of evaluating the regulatory framework, its implementation and its effects on firms and consumers. Market fragmentation has diminished significantly over the years; however, the number of very small firms in the market is still high. In the competitive tender procedures held so far, the number of bidders and the concession fees awarded have been high; however, regulatory loopholes and concerns over the ability of municipalities to organize and carry out competitive procedures have emerged. Tariff regulation has led to a reduction of distribution prices, but firms are highly profitable, which might indicate that they still enjoy significant rents. The uncertainty and variability of the tariff system and the delays in the implementation of third-party access regulation has hindered the development of competition in the residential gas market. The new rules on the size of local markets and on bidding criteria should significantly improve the regulatory framework of tenders. |
| Keywords: | Natural Gas Distribution, Local Public Utilities, Economic Regulation |
| JEL: | L95 L98 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_21_08&r=reg |
| By: | John W. Dawson; John J. Seater |
| Abstract: | We introduce a new measure of the extent of federal regulation in the U.S. and use it to investigate the relationship between federal regulation and macroeconomic performance. We find that regulation has statistically and economically significant effects on aggregate output and the factors that produce it–total factor productivity (TFP), physical capital, and labor. Regulation has caused substantial reductions in the growth rates of both output and TFP and has had effects on the trends in capital and labor that vary over time in both sign and magnitude. Regulation also affects deviations about the trends in output and its factors of production, and the effects differ across dependent variables. Regulation changes the way output is produced by changing the mix of inputs. Changes in regulation and marginal tax rates offer a straightforward explanation for the productivity slowdown of the 1970s. Key Words: Regulation; macroeconomic performance; economic growth; productivity slowdown |
| JEL: | E20 L50 O40 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:09-02&r=reg |
| By: | Böhringer, Christoph; Moslener, Ulf; Oberndorfer, Ulrich; Ziegler, Andreas |
| Abstract: | We analyze the productivity effects of environmental (green) investment as well as of environmental expenditures and energy expenditures. For this purpose, we follow a production function approach where we account for these investment and expenditure categories as inputs. Based on a panel dataset for the German manufacturing industry between 1996 and 2002 we find that both environmental and energy expenditures do not contribute to production growth. In contrast, environmental investment positively impinges upon production growth as a productivity driver. We thus conclude that environmental regulation should stimulate investment in order to be compatible with economic goals such as productivity. |
| Keywords: | environmental performance, environmental regulation, productivity |
| JEL: | D24 Q28 Q58 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7433&r=reg |
| By: | Magda Bianco (Banca d'Italia); Paolo Sestito (Banca d'Italia) |
| Abstract: | The paper summarizes the framework used in a research project on local public services carried out by Bank of Italy researchers. It discusses motivations, characteristics, results and general lessons of the project, whose sector-specific results are detailed in individual papers. The project was set up to analyze the effectiveness and outcomes of a set of reforms initiated approximately 15 years ago (but still unfinished in many respects). Studies of specific economically important and socially sensitive sectors were performed, to obtain an updated picture of the current framework (ownership structure, role of local authorities) and evaluate performance (market structure, costs and quality, profitability, environmental results). A set of horizontal studies (on the evolution of regulation, the spread of project financing, the growth of some large players) complemented the sectoral analyses. As a whole the project confirmed that the results of the reforms have been unsatisfactory. The paper also discusses some characteristics of the regulatory framework and market structures that could explain the reforms’ poor results: a) insufficient attention to sectoral peculiarities in the regulatory design; b) the approach used in determining tariffs that should have covered full costs; c) excessively fragmented regulatory authorities, which were set up at too local a level; d) insufficient separation between the different roles played by local authorities as regulators, majority shareholders of service providers and representatives of consumers’ interests. |
| Keywords: | local public services, liberalization, regulation |
| JEL: | H23 H42 H75 K23 L33 L43 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_18_08&r=reg |
| By: | Mario Tonveronachi; Elisabetta Montanaro |
| Abstract: | Unlike the official view which ascribes the current crisis to some anomalies of the securitisation processes, and consistently proposes minor adjustments to the existing regulatory apparatus, our opinion is that we are facing the last episode of a string of crises originated by the structural evolution of the financial systems in the last decades. Adopting a systemic approach, we summarise this evolution in six critical points and show the necessity of a radical overhaul of the regulatory framework. A preliminary scheme of consistent regulatory measures is then proposed, aiming at an acceptable degree of systemic stability while reasserting the fundamental function of the financial sector of promoting private productive investments and innovation |
| Keywords: | financial regulation, international finance, crises, systemic stability |
| JEL: | G2 F33 E44 G28 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:553&r=reg |
| By: | Mattoo, Aaditya (The World Bank); Mishra, Deepak (The World Bank) |
| Abstract: | Changes in demographics and patterns of investment in human capital are creating increased scope for international trade in professional services. The scope for mutually beneficial trade is, however, inhibited not only by quotas and discriminatory taxation, but also by domestic regulation -- including a range of qualification and licensing requirements and procedures. To illustrate the nature and implications of these regulatory impediments, this paper presents a detailed description of the regulatory requirements faced in the United States market by four types of Indian professionals: doctors, engineers, architects, and accountants. India is one of the largest exporters of skilled services, and the United States is one of the largest importers of skilled services, so these two countries reflect broader global trends. The paper argues that regulatory discrimination, for example through preferential recognition agreements, has implications both for the pattern of trade and for welfare. It presents some illustrative estimates that suggest the economic cost of regulations may be substantial. The paper concludes by examining how the trade-inhibiting impact of regulatory requirements could be addressed through bilateral and multilateral negotiations. |
| Keywords: | Accreditation; architect; architects; Architecture; barriers to entry; board meeting; candidate; candidates; career; career advancement; Certificate; |
| Date: | 2008–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4782&r=reg |
| By: | Francisco J. André (Department of Economics, Universidad Pablo de Olavide); Abderrahmane Sokri (DRDC Centre for Operational Research and Analysis, Ottawa, Canada); Georges Zaccour (Chair in Game Theory and Management and GERAD, HEC Montréal, Canada) |
| Abstract: | A Public Disclosure Program (PDP) is compared to a traditional environmental regulation (exemplified by a tax/subsidy) in a simple dynamic framework. A PDP aims at revealing the environmental record of firms to the public. This information affects its image (goodwill or brand equity), and ultimately its profit. In our model, this impact is endogenous, i.e., a firm polluting less than its prescribed target would win consumer's sympathy and raises its goodwill, whereas it is the other way around when the firm exceeds its emissions quota. The evolution of this goodwill is assumed to depend also on green activities or advertising expenditures. Within this framework, we analyse how a PDP affects the firm's optimal policies regarding emissions, pricing and advertising as compared to a traditional regulation. We show that advertising acts as a complementary device to pricing and that emissions are increasing in goodwill. We also conclude that the effects of a PDP are more pronounced than those of traditional instruments for firms with a high goodwill. Moreover, we study under which conditions a PDP may be profit improving and we connect this issue to the possibility that a PDP can induce firms to overcomply with the standard. The numerical value of the emission target is rather innocuous in a market-based setting but it turns to be a crucial variable in the presence of a PDP. The theoretical results are complemented with a numerical illustration. |
| Keywords: | Market-based Environmental Regulation, Public Disclosure Program, Pricing, Advertising, Goodwill, Optimal Control. |
| JEL: | C61 Q58 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:09.02&r=reg |
| By: | Paolo Chiades (Banca d'Italia); Roberto Torrini (Banca d'Italia) |
| Abstract: | The modernization of the solid waste management sector prompted by the Ronchi decree of 1997 has proceeded slowly and is far from being completed. Regional differentials in the effectiveness of local policies and in the efficiency of waste collection and disposal firms are still large. Southern regions are lagging behind while northern regions on the whole have achieved the environmental objectives and modernized the waste management system. Local differences in service methods and quality have affected operating costs, which are higher on average in the South. Significant problems of economic regulation have yet to be solved. The self-sufficiency principle for the treatment and disposal phases and their high level of integration with the collection phase hamper competition and make it desirable for there to be regulation of the terms and condition for access to disposal facilities. Moreover, should the Government decide to adopt a vertically integrated legal monopoly model, with compulsory competitive tendering, some doubts could arise concerning the ability of local authorities to perform this task, given the complexity of the underlying contracts. Assigning responsibility for the economic regulation of the sector to a national authority could prove to be helpful. |
| Keywords: | Public utilities, Solid waste management, Economic regulation |
| JEL: | L32 L51 Q53 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_22_08&r=reg |
| By: | Tanya Wanchek (Center for Economic and Policy Studies) |
| Abstract: | By specializing in preventative oral healthcare, dental hygienists (DHs) have the potential to improve oral health in the United States. DHs decrease the cost and increase the availability of oral healthcare beyond what would be provided by dentists alone. Yet, laws and regulations in many U.S. states prevent DHs from fulfilling their potential. A prior study by Wing et al. (2005) found that states that impose more restrictions on the functions DHs are permitted to perform have lower wages and poorer oral health outcomes. This study adds entry restrictions, including educational and licensure requirements, to the analysis by developing a model in which a state’s entry and practice restrictions jointly affect the DH labor market and access to care. After evaluating anecdotal evidence from four case studies, we estimate the effect of variations in entry and practice restrictions across the U.S. using a three stage least squares (3SLS) estimation method. The results are consistent with the hypotheses that entry restrictions reduce employment rates, practice restrictions increase productivity and wage rates, and wage and employment rates are endogenous to each other and jointly influence access to care. The implication for states seeking to improve oral health is that both entry and practice laws and regulations must be considered jointly in order to significantly improve access to care. |
| Keywords: | Oral health, dental hygiene regulation, occupational licensure |
| JEL: | J44 I11 K23 J21 |
| Date: | 2009–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:vac:wpaper:wp09-02&r=reg |
| By: | Daniele Sabbatini (Banca d'Italia) |
| Abstract: | This paper outlines the evolution of the regulatory framework for the supply of local public utilities, social and health services since the early nineties. That framework is rendered complex by frequent legislative reforms, the overlap of general rules and specific rules for some services, and the division of legislative powers among the European Community, the central government and regional governments. The various reform acts, both horizontal and sector-specific, have not always pursued homogenous goals, seeking in some cases to foster and in others to restrain competition. The rules for local public utilities have recently changed again: competitive tendering is now the standard mechanism for awarding contracts to supply services, but local authorities may still supply services through in-house providers or use other contract award procedures where they deem it impossible to introduce competitive mechanisms. |
| Keywords: | regulation, local public utilities |
| JEL: | K23 L50 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_19_08&r=reg |
| By: | Edmond Baranes; François Mirabel; Jean-Christophe Poudou |
| Abstract: | In this paper, we study how competition on downstream gas markets is influenced by sourcing decisions in the supply chain. We analyze the sequential relationships between storage decisions and intermediate pricing in spot markets. We show that an upstream leadership in the access to storage facilities leads a dominant firm to adopt strategic storage decision. This strategy consists in stockpiling more than supplied in the downstream market. This behavior is a part of a raising rival's cost strategy for the leader. Furthermore in some cases, optimal regulation of gas storage access may not prevent such a behavior. |
| Keywords: | Storage, spot market, gas markets, regulation |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:mop:lasrwp:2008.24&r=reg |
| By: | Michele Benvenuti (Banca d'Italia); Elena Gennari (Banca d'Italia) |
| Abstract: | The paper investigates the organization of the Italian water sector in the light of the reforms of public utilities. The aim is to examine the degree of implementation of the water sector reform (the so-called Galli Law of 1994) and assess the performance of operators through a study of their financial indicators and a non-parametric efficiency analysis. The information sources include two Bank of Italy surveys carried out in 2007 on local public water authorities and local water service providers. Financial indicators point to a low return on equity: for more than half of the firms it is lower than the risk-free interest rate. The non-parametric efficiency analysis does not reveal significant economies of scope and highlights a certain degree of variability of technical efficiency scores. This suggests that there is room for efficiency gains through the introduction of comparative competitive mechanisms such as the yardstick competition. |
| Keywords: | water supply, data envelopment analysis, public utilities, natural monopoly, regulation |
| JEL: | K23 L95 Q25 C61 D24 H42 L51 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_23_08&r=reg |
| By: | Malory Greene; Charles Tsai |
| Abstract: | This study analyses the People’s Republic of China’s trade policy environment with a focus on trade-related regulations and their role in supporting China’s market openness. It examines in particular to what extent China’s trade regulations comply with the principles of transparency and non-discrimination and facilitate foreign trade operations and international competition. The report proposes a series of policy recommendations to make China’s regulatory framework more market-oriented and trade-and-investment friendly. The study is complemented with a business survey of OECD member country enterprises and Chinese firms. The survey assesses government influence on the investment climate through the impact of their policies on the costs, risks and barriers to competition facing firms. The main report and the business survey conclude that transparency plays a critical role in the development of a healthy business environment by reducing regulatory impediments. |
| Keywords: | investment, trade policy, regulatory reforms, transparency, intellectual property rights, standards, market openness, non-discrimination, China, conformity assessment, trade restrictiveness index, trade reform |
| Date: | 2008–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:83-en&r=reg |
| By: | Alexeeva-Talebi, Victoria; Anger, Niels; Löschel, Andreas |
| Abstract: | Ambitious unilateral EU environmental policy has raised concerns about adverse competitiveness implications for European energy-intensive and export-oriented sectors. We analyze the economic and environmental implications of two different measures to address these concerns in the EU Emission Trading Scheme (EU ETS): border tax adjustments (BTA) and the Clean Development Mechanism (CDM). Numerical simulations with a computable general equilibrium model of the global economy demonstrate that alternative BTA regimes are suitable to alleviate adverse competiveness implications of unilateral European climate policy on energy-intensive and export-oriented industries. The regulatory protection of these industries via subsidies for EU exporters and tariffs for non-EU importers goes, however, at the expense of sectors which are excluded from the EU ETS. We show that the choice of alternative benchmarks (i.e. carbon intensities) for the level of BTA substantially affects these competitiveness implications. The simulations further indicate that limited access to low-cost emission abatement via the CDM in the EU ETS alleviates adverse competitiveness impacts to a comparable extent as the most ambitious BTA scheme. Increasing “where-flexibility” of emission abatement thus represents an attractive market-based alternative to the application of border tax adjustments in unilateral climate policy. |
| Keywords: | Emissions Trading, EU ETS, Competitiveness, Border tax adjustments, Clean Development Mechanism, CGE model |
| JEL: | D58 F18 H23 Q48 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7437&r=reg |
| By: | de la Torre, Augusto (The World Bank); Soledad Martinez Peria, Maria (The World Bank); Schmukler, Sergio L. (The World Bank) |
| Abstract: | This paper studies the factors banks perceive as drivers and obstacles to financing small and medium enterprises (SMEs), focusing on the role of competition and the institutional framework. Using a survey of banks in Argentina and Chile, the paper shows that, despite alleged differences in the countries' environments regarding rules, regulations, and ease of doing business, SMEs have become a strategic segment for most banks in both countries. In particular, banks have begun to target SMEs due to the significant competition in the corporate and retail sectors. They perceive the SMEs market as highly profitable, large, and with good prospects. Moreover, banks are developing coping mechanisms to overcome the particular institutional obstacles present in each country and to compete for SMEs. Banks' interest in SMEs is not based on government programs, yet policy action might help reduce the cost of providing financing, especially long-term lending. |
| Keywords: | small and medium enterprises; bank finance; financial constraints; banking market structure; institutional factors; regulation; competition |
| JEL: | G21 G28 L25 O12 O16 |
| Date: | 2008–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4788&r=reg |
| By: | Jacob A. Bikker; Laura Spierdijk |
| Abstract: | The first part of this paper provides a systematic discussion of the structural problems of competition on financial markets as observed from the demand and from the supply side, using a diagnostic framework. Potential impediments to competition are concentration, entry barriers, lack of transparency, product complexity, switching and search costs, financial illiteracy, lack of consumer power and weak intermediaries. In response to such financial market failures, we suggest a number of possible policy reactions. The second part of the paper investigates ways to measure competition and provides empirical figures on banking competition in 101 separate countries and assesses the market structure as monopolistic (or a perfect cartel), perfectly competitive or monopolistic competitive. Also, banking competition is explained, using explanatory variables of market structure, contestability, inter-industry competition, and institutional and macro economic conditions. This analysis provides possible instruments for reform in order to help promote competition. Next, the impact of banking consolidation is examined. Finally, developments in competition are observed over time, generally pointing to a downward trend. |
| Keywords: | competition, concentration, entry barriers, transparency, consolidation, contestability, institutional conditions, restrictions on activities or investment, regulation, Panzar-Rosse model. |
| JEL: | G21 G28 L1 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:use:tkiwps:0901&r=reg |
| By: | Chiara Bentivogli (Banca d'Italia); Roberto Cullino (Banca d'Italia); Diana Marina Del Colle (Banca d'Italia) |
| Abstract: | This paper studies the effects on local public transport of the reform begun in the late nineties, using data from a recent Bank of Italy survey. There are still substantial differences across Italy’s regions, and the level of efficiency is far from the original aims of the reform. Although almost all Italian regional councils formally aligned the local legislation to the new national rules, actual compliance with the deeper logic of the reform has been limited so far. Competitive tendering for the selection of local service providers have seldom been used, while auctions have usually been won by local public incumbents. Albeit limited, efficiency gains are larger wherever the reform has been implemented more thoroughly and the variables influencing public transport demand more carefully taken into account. The share of the population that uses public transport has not increased even in major cities, and the low share of users (by international standards) has gone hand in hand with a negative overall evaluation of service quality. Fares are still much lower than unit costs. |
| Keywords: | Regulation, Local Public Transport |
| JEL: | H40 K23 L33 L43 L92 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_20_08&r=reg |