nep-reg New Economics Papers
on Regulation
Issue of 2009‒10‒03
ten papers chosen by
Christian Calmes
Universite du Quebec en Outaouais

  1. Optional linear input prices in vertical relations By Salim, Claudia
  2. When You’ve Seen One Financial Crisis… By Simon van Norden
  3. U.S. Trade in Toxics: The Case of Chlorodifluoromethane (HCFC-22) By Randy Becker; John Tang
  4. Globalization and Protection of Employment By Fischer, Justina AV; Somogyi, Frank
  5. FDI protectionism is on the rise By Sauvant, Karl P.
  6. The European Commission and EUA prices: a high-frequency analysis of the EC's decisions on second NAPs By Rotfuß, Waldemar; Conrad, Christian; Rittler, Daniel
  7. Article 82 EC – The Problems and The Solution By John Temple Lang
  8. The global resort to antidumping, safeguards, and other trade remedies amidst the economic crisis By Bown, Chad P.
  9. Controlling externalities in the presence of rent seeking By Ian A. MacKenzie
  10. An Integrated Approach to Simulate the Impacts of Carbon Emissions Trading Schemes By Xavier Labandeira Villot; Pedro Linares; Miguel Rodríguez

  1. By: Salim, Claudia
    Abstract: This paper examines how the option of a regulated linear input price affects vertical contracting, where a monopolistic upstream supplier sequentially offers supply contracts to two symmetric downstream firms. We find that equilibrium contracts vary with production cost and regulated price level: If the regulated price is not too high, the option allows for price discrimination, but prevents foreclosure in the intermediary market. Indeed, if both cost and optional price are rather low, non-discriminatory input prices below cost may arise. Optional input prices are socially more desirable than a flat ban on price discrimination, as consumers benefit from more intense downstream competition.
    Keywords: Price discrimination,vertical contracting,exclusion,regulatory outside option
    JEL: D42 L11 L42
    Date: 2009
  2. By: Simon van Norden
    Abstract: Financial market crises may differ, but severe banking crises typically share many common features. The most recent crisis shares many features with the US Savings and Loan crisis of the 1980s and early 90s as well as some features of the LTCM crisis of 1998. More generally, banking crises are commonly associated with real estate market collapses. Effectively reducing the risk of future crisis requires some combination of reducing the potential size of real estate market collapses and the banking sector’s exposure to real estate losses. <P>Les crises des marchés des capitaux peuvent différer, mais les crises bancaires graves partagent en général de nombreuses caractéristiques. La crise la plus récente ressemble à de nombreux égards à la crise américaine de l’épargne et du crédit (Savings and Loans) des années 80 et du début des années 90, ainsi qu’à la crise LTCM en 1998. De façon plus générale, les crises bancaires sont souvent associées aux effondrements du marché immobilier. Pour réduire efficacement le risque de crises futures, il faut réduire l’ampleur potentielle des effondrements du marché immobilier, diminuer la vulnérabilité du secteur bancaire aux pertes du marché immobilier, ou les deux.
    Keywords: Financial Crisis, banking crisis, bubbles, real estate, financial regulation, regulatory reform , crises financières, crises bancaires, marché immobilier, réglementation financière
    Date: 2009–09–01
  3. By: Randy Becker; John Tang
    Abstract: This paper explores whether environmental regulation affects where pollution-intensive goods are produced. Here we examine chlorodifluoromethane (HCFC-22), a chemical designated as toxic in 1994 by the U.S. Environmental Protection Agency’s Toxics Release Inventory (TRI). Trends show a decline in the number of domestic producers of this chemical, a decline in the number of manufacturing facilities using it, and an increase in the number (and share) of facilities claiming to import it. Transaction-level trade data show an increase in the import of HCFC-22 imports since its TRI listing – an increase that is faster than that of all non-TRI listed chemicals. This is suggestive of a pollution haven effect. Meanwhile, we find that the vast majority of U.S. imports of HCFC-22 come from OECD countries. However, an increase in the share of imports from non-OECD countries since the chemical’s listing suggests a shift of production to countries with more lax environmental standards. While the findings here are suggestive of regulatory effects, more rigorous analyses are needed to rule out other possible explanations.
    Date: 2009–09
  4. By: Fischer, Justina AV; Somogyi, Frank
    Abstract: Unionists and politicians frequently claim that globalization lowers employment protection of workers. This paper tests this hypothesis in a panel of 28 OECD countries from 1985 to 2003, differentiating between three dimensions of globalization and two labor market segments. While overall globalization is shown to loosen protection of the regularly employed, it increases regulation in the segment of limited-term contracts. We find the economic one to drive deregulation for the regularly employed, but the social one to be responsible for the better protection of workers in atypical employment. We offer political economy arguments as explanations for these differential effects.
    Keywords: Globalization; international trade; integration; employment protection; labor standards; unions; cross-country analysis; panel data analysis
    JEL: F16 F15 J81 O57 J83 C33
    Date: 2009–09–25
  5. By: Sauvant, Karl P.
    Abstract: Over the past two decades or so, countries have liberalized their FDI regulatory frameworks and have put in place an international investment law regime that provides various protections for international investors. In the past few years, however, there are signs that countries are reevaluating their approach toward such investment. As a result, FDI protectionism is on the rise, with screening of inward M&As becoming more frequent. Typically, this is being done under the guise of"national interest"or similar concepts, often linked to strategic sectors and national champions. While the international investment law regime faces a challenge to find the right balance between the rights and responsibilities of governments and investors, care needs to be taken that the rise of FDI protectionism does not endanger a rules-based approach to FDI. An independent FDI Protectionism Observatory to monitor new protectionist measures and name and shame countries that take them is therefore needed.
    Keywords: Debt Markets,Emerging Markets,Investment and Investment Climate,,Trade and Regional Integration
    Date: 2009–09–01
  6. By: Rotfuß, Waldemar; Conrad, Christian; Rittler, Daniel
    Abstract: This paper empirically examines price formation in the European Union Emissions Trading Scheme (EU ETS). Our analysis shows that unexpected allocations of European Union Allowances (EUAs) lead to pronounced price reactions of the expected signs. Moreover, we find evidence that the adjustment of EUA prices to the European Commission's decisions on second National Allocation Plans (NAPs) is not instantaneous, but takes up to six hours after the decision announcement.
    Keywords: EU ETS,price formation,European Union Allowance (EUA),European Commission
    JEL: G13 G14 G15 G19 Q4 Q5
    Date: 2009
  7. By: John Temple Lang (Cleary Gottlieb Steen & Hamilton LLP, Trinity College and Senior Visiting Research Fellow)
    Abstract: The Commission's Guidance paper on exclusionary abuse under Article 82 EC is open to three fundamental criticisms. First, it leads to less legal certainty, because the rules suggested are vague and imprecise, because dominant companies will not have the information needed to apply them, and because the Commission is trying to change the law, which it has no power to do. Second, it would lead to some anticompetitive effects, because in practice it discourages price competition, by discouraging individualised price negotiations and retroactive rebates, and by suggesting that the Commission will protect not-yet-as-efficient competitors from price competition. Third, it leads to too many "false positives", i.e., findings of exclusionary abuse that are not justified in economics or law. The solution is to return to the test in the Treaty as interpreted by the Court of Justice: an exclusionary abuse must involve limiting the production, marketing or technical development of competitors of the dominant company, if harm is caused to consumers.
    Keywords: Article 82EC, Competition, Abuse
    JEL: K21
    Date: 2009–08
  8. By: Bown, Chad P.
    Abstract: This paper examines newly available data from the World Bank-sponsored Global Antidumping Database tracking the worldwide use of trade remedies such as antidumping, countervailing duties, global safeguards and China-specific safeguards during the current economic crisis. The data indicate a marked increase in WTO members’ combined resort to these instruments beginning in 2008 that continued into the first quarter 2009. The use of these import-restricting instruments is increasingly affecting"South-South"trade, i.e., developing country importers initiating and imposing new protectionist measures primarily affecting developing country exporters, with a special emphasis on exports from China. However, the collective value of imports in 2007 for the major (G-20) economies that has subsequently come under attack by the use of import-restricting trade remedies during the period of 2008 to early 2009 is likely less than $29 billion, or less than 0.45 per cent of these economies’ total imports, though there is substantial variation across countries. While the level of trade affected thus far may be small for most of these economies, a first assessment of some of the case-level data identifies a number of ways in which the crisis use of these import-restricting trade remedies may have economically important welfare-distorting effects on economic activity.
    Keywords: Trade Law,Free Trade,Trade Policy,Economic Theory&Research,Emerging Markets
    Date: 2009–09–01
  9. By: Ian A. MacKenzie (CER-ETH - Center of Economic Research at ETH Zurich, Switzerland)
    Abstract: Contests are a common method to describe the distribution of many different types of rents. Yet in many of these situations the utilisation of the prize plays an important role in determining agents payoffs and incentives. In this paper, we investigate the incentives to expend effort for a prize that produces consumption externalities and consider alternative regulatory policies. We find relatively more global consumption externalities will increase (decrease) rent seeking when con- sumption externalities are negative (positive). We show how introducing Pigouvian taxation (possibly with revenue transfer) and Coasean bargaining alters equilib- rium effort and payoffs. Pigouvian taxation tends to reduce both effort and payoffs whereas this is not always the case for Coasean bargaining. In the presence of suf- ficiently large consumption externalities, establishing Pigouvian taxation coupled with some element of lump-sum transfer may reduce costly rent seeking effort and improve the welfare of some agents compared to other approaches.
    Keywords: externalities, contest, natural resources
    JEL: C72 D63 D62 D31 Q53
    Date: 2009–07
  10. By: Xavier Labandeira Villot; Pedro Linares; Miguel Rodríguez
    Abstract: The present paper aims to reliably depict the impact of the European Union Emissions Trading Scheme (EU ETS) on Spain under different assumptions about the industries involved. Prior analyses, based either on highly aggregated macroeconomic or specific electricity industry models, have been limited in degree of detail or scope. Two types of modeling were combined in the present study: general equilibrium was used to assess the impact on different industries and to explain cross-industry changes, and partial equilibrium to suitably model the complex and crucial electricity system. Combining and interrelating these two models yields the effects on price, carbon dioxide (CO2) emissions and distributional patterns in Spain of both the current policy and an alternative in which all industries take part in the EU ETS. Since Spain is a key participant in this scheme, the conclusions and policy implications stemming from this paper are relevant to and useful for post-Kyoto arrangements.
    Date: 2009–09

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