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on Regulation |
| By: | Hussein, Mohamud; Fearne, Andrew, Prof; Martinez, Marian Garcia, Dr; Di Falco, Salvatore, Dr |
| Abstract: | Food safety controls are currently enforced in the UK by a variety of regulatory approaches that considerably differ in their efficiency and effectiveness in achieving social goals of safe food supply and improved consumer confidence. Aim of this study is to establish whether a coregulatory enforcement of these controls is more cost-effective than the traditional commandand- control enforcement modes. First of its kind, the study reviewed a vast theoretical literature on economics of food safety and incentives to develop a conceptual framework and appropriate methodology for comparative cost-effectiveness analysis of co-regulatory approaches to food hygiene controls in the UK meat industry. A panel data on costs and compliance of 710 meat firms operating in the UK and Northern Ireland is collected analysed using fixed-effects model. Results of this analysis show that the co-regulatory approaches can be cost-effective when regulators are capable of devising incentive mechanism that encourages compliance. These findings call for a systematic evaluation of existing regulatory and market incentives to facilitate a more widespread consideration of co-regulation in the UK food industry and supply chains, particularly in sectors that do not presently lend themselves to co-regulation. The findings of the study have empirical implications for food policymakers, analysts and enforcement officers engaged in the analysis, development and implementation of strategies for improving food safety. |
| Keywords: | cost-effectiveness, co-regulation, food safety, incentives, panel data modelling., Food Consumption/Nutrition/Food Safety, C23, K32, Q18, Q28, |
| Date: | 2010–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aesc10:91725&r=reg |
| By: | Paul de Bijl; Martin Peitz |
| Abstract: | The introduction of VoIP telephony raises concerns about current regulatory practice. Access regulation has been designed for PSTN and the liberalization of the PSTN market. This paper explores the effects of access regulation of PSTN networks on consumers’ adoption of a new technology in the form of VoIP. It also discusses the link between access regulation and the incentives to invest in VoIP. |
| Keywords: | telecommunications; voice over broadband (VoB); voice over Internet protocol (VoIP); entry; access; regulation |
| JEL: | L96 L51 L13 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:153&r=reg |
| By: | Cao, Jin |
| Date: | 2010–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:dissen:11161&r=reg |
| By: | Michiel Bijlsma; Jeroen Klomp; Sijmen Duineveld |
| Abstract: | The financial crisis has put systemic risk firmly on the policy agenda. In such a crisis, an initial shock gets amplified while it propagates to other financial intermediaries, ultimately disrupting the financial sector. We review the literature on such amplification mechanisms which create externalities from risk taking. We distinguish between two classes of mechanisms: contagion within the financial sector and pro-cyclical connection between the financial sector and the real economy. Regulation can diminish systemic risk by reducing these externalities. However, regulation of systemic risk faces several problems. First, systemic risk and its costs are difficult to quantify. Second, banks have strong incentives to evade regulation meant to reduce systemic risk. Third, regulators are prone to forbearance. Finally, the inability of governments to commit not to bail out systemic institutions creates moral hazard and reduces the market’s incentive to price systemic risk. Strengthening market discipline can play an important role in addressing these problems, because it reduces the scope for regulatory forbearance, does not rely on complex information requirements, and is difficult to manipulate. |
| Keywords: | Financial markets; Contagion; Systemic risk |
| JEL: | G28 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:docmnt:210&r=reg |
| By: | Santiago Fernández de Lis; Alicia Garcia Herrero |
| Abstract: | After analyzing the different reasons why the financial system and also the regulatory framework induced procyclicality, this paper reviews the experiences of three countries which have introduced dynamic provisioning as a regulatory tool to limit procyclicality. The case of Spain—the country with the longest experience—is reviewed as well as those of Colombia having recently adopted dynamic provisioning. A number of policy lessons are drawn from that comparison. |
| Keywords: | Financial Stability, banking regulation, dynamic provisioning, Spain, Peru |
| JEL: | E32 G21 G28 G32 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:bbv:wpaper:1014&r=reg |
| By: | Isabel Soares (CEF.UP, Faculdade de Economia, Universidade do Porto, Portugal); Paula Sarmento (CEF.UP, Faculdade de Economia, Universidade do Porto, Portugal) |
| Abstract: | In this paper we discuss the European regulation policy regarding vertical separation in communications and electricity industries. In the electricity sector the discussion concerns ownership unbundling while in communications the regulatory debate is about functional separation. We conclude that for electricity, ownership unbundling seems to be the best option to achieve competition in wholesale markets although there is still some risks concerning investment. Instead, for the communication sector the regulatory options are deeply dependent on the intensity of network competition between operators that combine different technological platforms. Technology also seems to be a key driver for diverse regulatory approaches concerning the unbundling requirement. |
| Keywords: | unbundling, communications, electricity, next generation networks |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:380&r=reg |
| By: | Caporale, Guglielmo Maria (Brunel University); Rault, Christophe (University of Orléans); Sova, Robert (CREST & University of Paris 1 Panthéon-Sorbonne); Sova, Ana Maria (CREST & University of Paris 1 Panthéon-Sorbonne) |
| Abstract: | According to the pollution haven hypotheses differences in environmental regulation affect trade flows and plant location. Specifically, environmental stringency should decrease exports and increase imports of "dirty" goods. This paper estimates a gravity model to establish whether the implementation of more stringent regulations in Romania has indeed affected its competitiveness and decreased exports towards its European trading partners. Our findings do not provide empirical support to the pollution haven hypothesis, i.e. environmental stringency is not found to affect significantly total trade, or its components (pollution intensive trade and pollution intensive trade related to non-resource-based trade). |
| Keywords: | environmental stringency, competiveness, gravity model |
| JEL: | F14 Q28 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5029&r=reg |
| By: | Hugh Rockoff (Rutgers) |
| Abstract: | Adam Smith and Milton Friedman are famous for championing Laissez Faire, yet both supported government regulation of the banking system. In both cases their deviation from free market orthodoxy was based on a careful reading of financial history: especially Smith's reading of the Crisis of 1772 and Friedman's reading of the Crisis of 1929-33. In both cases they based their reading on a complex and nuanced account of human nature. This paper describes their parallel journeys to the conclusion that banking requires government regulation. |
| Keywords: | banking, Adam Smith, Milton Friedman |
| JEL: | B10 |
| Date: | 2010–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:rut:rutres:201004&r=reg |
| By: | Ojo, Marianne |
| Abstract: | Recent years have witnessed a change in focus from considerations of factors which could impede competition, for example over-regulation, to the need to strike a balance between over-regulation and insufficient regulation – in order to provide the right level of safety for consumers (such that they are protected from risky investments). A driving force behind the need for deregulation over the past two decades has been the objective and desire to foster competition. Re-regulation thereafter assumed centre stage in some jurisdictions in response to the need to manage cross sector services' risks more efficiently. Rescue cases involving guarantees (contrasted with restructuring cases) during the recent Financial Crisis, have illustrated the prominent position which the goal of promoting financial stability has assumed over that of the prevention or limitation of possible distortions of competition which may arise when granting State aid. The importance attached to maintaining and promoting financial stability - as well as the need to facilitate rescue and restructuring measures aimed at preventing systemically relevant financial institutions from failure, demonstrate how far authorities are willing to overlook certain competition policies. However increased government and central bank intervention also simultaneously trigger the usual concerns – which include moral hazard and the danger of serving as long term substitutes for market discipline. An interesting observation derives from the relationship between State aid grants, competition, and the potential to induce higher risk taking levels. Whilst the need to promote and maintain financial stability is paramount, safeguards need to be implemented and enforced to ensure that measures geared towards the aim of sustaining system stability (measures such as lender of last resort arrangements and State rescues) do not unduly distort competition as well as induce higher risk taking levels. This paper will draw attention to safeguards which have been provided by the Commission where approval is considered for the grant of State aid to financial institutions whose problems are attributable to inefficiencies, poor asset liability management or risky strategies. Whether the distinction drawn by the Commission – with regards to the preferential grant of recapitalisation packages to fundamentally sound banks (which require less restructuring measures)is justified, will also be considered. How far central banks and governments should intervene and how far distortions of competition should be permitted ultimately depends on how systemically relevant a financial institution is. |
| Keywords: | Competition; central banks; recapitalisation; stability; regulation; financial crises; fundamentally sound financial institutions |
| JEL: | K2 E58 G18 |
| Date: | 2010–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:23651&r=reg |
| By: | Huang, Haifang (University of Alberta, Department of Economics); Tang, Yao (Department of Economics, Bowdoin College) |
| Abstract: | In a sample covering more than 300 cities in the US between January 2000 and July 2009, we find that more restrictive residential land use regulations and geographic land constraints are linked to larger booms and busts in housing prices. The natural and man-made constraints also amplify price responses to an initial positive mortgage-credit supply shock, leading to greater price increases in the boom and subsequently bigger losses. |
| Keywords: | residential land use regulation; credit expansion; housing prices |
| JEL: | R30 |
| Date: | 2010–07–07 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2010_011&r=reg |
| By: | Vickers, John |
| Abstract: | One of the most controversial questions in current competition policy is when, if ever, should competition law require a firm with market power to share its property, notably intellectual property, with its rivals? And if supply is required, on what terms? These questions are discussed with reference to recent law cases including the EC Microsoft judgment of 2007 and the US linkLine case of 2009. The analysis focuses on whether competition law and regulation are complements or substitutes and on incentives for investment and (sequential) innovation. |
| JEL: | O34 L41 O31 K21 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:ner:oxford:http://economics.ouls.ox.ac.uk/14784/&r=reg |
| By: | Roy Chowdhury, Prabal |
| Abstract: | We examine pollution-reducing R&D by a monopoly firm producing a dirty product. In a dynamic framework with hyperbolic discounting, we establish conditions under which the Porter hypothesis goes through, i.e. environmental regulation increases R&D, thus reducing pollution, as well as increasing firm profits. This is likely to hold whenever R&D costs are at an intermediate level, and the planning horizon of the firms is large. |
| Keywords: | Porter hypothesis; abatement tax; R&D; hyperbolic discounting; |
| JEL: | Q50 D78 D42 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:23647&r=reg |
| By: | Coria, Jessica (Department of Economics, School of Business, Economics and Law, Göteborg University); Villegas-Palacio, Clara (Facultad de Minas. Universidad Nacional de Colombia &) |
| Abstract: | In practice, targeted monitoring seems to be a strategy frequently used by regulators. In this paper, we study the effects of targeted monitoring strategies on the adoption of a new abatement technology and, consequently, on the aggregate emissions level when firms are regulated with uniform taxes. The results suggest that a regulator aiming to stimulate technology adoption should decrease the adopters’ monitoring probability and/or increase the non-adopters’ monitoring probability. In contrast to previous literature, we find that, in some cases, a regulator whose objective is to minimize aggregate emissions should exert a stronger monitoring pressure on firms with higher abatement costs.<p> |
| Keywords: | technology adoption; environmental policy; imperfect compliance; targeted enforcement |
| JEL: | K31 K42 L51 Q55 |
| Date: | 2010–07–07 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0455&r=reg |
| By: | Tyas Prevoo; Bas ter Weel |
| Abstract: | The Market Abuse Directive came into effect on 1 October 2005. One of its purposes is to reduce illegal insider trading and leakage of information prior to official releases by increasing penalties. Applying an event study approach to a dataset of almost 5,000 corporate news announcements, the analysis reveals that the information value of announcements, measured by the announcement day abnormal return and abnormal volume, is not significantly different after the new regulation than it was before although the number of releases has increased significantly. Trading suspicious of illegal insider trading and leakage of information, measured in terms of cumulative average abnormal returns and volumes for the 30 days prior to the news announcement, has significantly declined for small capitalization firms, for announcements containing information about alliances and mergers and acquisitions and for firms in the technology sector. |
| Keywords: | Market abuse; insider trading |
| JEL: | G14 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:154&r=reg |
| By: | Grimm, Veronika; Zöttl, Gregor |
| Abstract: | In liberalized electricity markets strategic firms compete in an environment characterized by fluctuating demand and non-storability of electricity. While spot market design under those conditions by now is well understood, a rigorous analysis of investment incentives is still missing. Existing models, as the peak-load-pricing approach, analyze welfare optimal investment and find that optimal investment is higher with more competitive spot markets. In this article we want to extend the analysis to investment decisions of strategic firms that anticipate competition on many consecutive spot markets with fluctuating (and possibly uncertain) demand. We study how the degree of spot market competition affects investment incentives and welfare and provide an application of the model to electricity market data. Our results show that more competitive spot market prices strictly decrease investment incentives of strategic firms. The reduction of investment incentives can be so intense to even offset the beneficial impact of more competitive spot market design. Those results obtain with and without free entry. Our analysis thus demonstrates that investment incentives necessarily have to be taken into account for a meaningful assessment of proper electricity spot market design. |
| Keywords: | Investment; demand fluctuation; cost fluctuation; spot market design |
| JEL: | D43 L13 D41 D42 D81 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:11705&r=reg |
| By: | M. Menegatti; D. Baiardi |
| Abstract: | The paper examines the effects of environmental uncertainty on Pigouvian tax and abatement policy used, either separately or contemporaneously, to counteract pollution. We discuss uncertainty in three aspects: environmental quality, pollution effect and the impact of abatement. For each case we determine the conditions ensuring that uncertainty increases the size of public intervention and provide an economic interpretation and some parallelisms with other risk problems. The last part of the paper generalizes some of our results to the case of N-th order risk changes. |
| Keywords: | Pigouvian tax, Abatement policies, Environment, Uncertainty, Bivariate utility |
| JEL: | H23 D81 Q5 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:par:dipeco:2010-ep04&r=reg |
| By: | HIGASHIDA Keisaku; MANAGI Shunsuke |
| Abstract: | Employing an experimental approach, this paper examines whether the efficiency of fishery management can be achieved under@Individual Transferable Quotas regimes. We analyze the situation in which subjects can choose from one of two vessel types: large-scale or small-scale. The fixed cost for large-scale vessels is higher than that for their small-scale counterparts, whereas the variable cost for large-scale vessels is lower. We find that the average trading price (ATP) converges to the theoretical equilibrium price (EQP). We also find that vessels are chosen rationally in the sense that, the greater the ATP, minus the EQP in past periods, the less incentive subjects have to invest in large-scale vessels. Moreover, quota prices in the first period could influence both the quota prices and the numbers of both types of vessels in the ensuing periods, and initial allocation could affect the rational choice of vessels. |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:10036&r=reg |
| By: | Bokushevar, Raushan; Kumbhakar, Subal C; Lehmann, Bernard |
| Abstract: | This paper analyzes the evolution of Swiss farm productivity during the implementation of environmental policy reforms. We employ a production model formulation with technology parameters defined as the functions of subsidies, as well as individual farm characteristics. Our estimates for two groups of farms â milk-producing and crop farms â show that introducing environmental regulations induced serious changes in the production technology and productivity of inputs, especially of land, labor and fertilizer. The overall effect of the subsidies on the production output has been found negative. At the same time, we find that farms do not use their resources optimally, which indicates some deficiencies in structural adjustments, primarily in the land and labor markets. |
| Keywords: | environmental regulations, productivity analysis, Swiss agriculture., Environmental Economics and Policy, Q120, D240, |
| Date: | 2010–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aesc10:91828&r=reg |
| By: | TAKARADA Yasuhiro |
| Abstract: | We examine trade and strategic interaction between countries that enforce technical measures for fisheries management (e.g., restrictions on fishing gears, vessels, areas and time) when countries share access to a common resource stock. Although technical measures are important as basic management tools, compliance with such measures makes it more costly for the fishermen to catch a certain quantity of fish. We show that under bilateral management, the resource exporting country gains from trade, whereas trade causes the steady state utility to fall in the resource importing country because the resource exporting country implements non-cooperative resource management when demand for a harvest is not so high. Under sufficiently high demand for a harvest, maximum sustainable yield can be attained after trade by what we call cooperative management; a situation in which both countries are better off. Under low demand for a harvest, trade benefits the resource importing country but may harm the resource exporting country regardless of whether it implements strict resource management or not. |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:10035&r=reg |
| By: | J.V. Meenakshi; A. Banerji |
| Abstract: | In consonance with the global trend of redefining the role of the government in developing and transition economies from producer to facilitator, there is today a lively debate in India on government intervention in grain markets, in the form of procurement and distribution of foodgrain. The role of the government in instituting regulated wholesale grain markets, with clearly spelled out rules of exchange and a transparent price formation process, is however less well known, compared to its roles of procurer and distributor of grain. The present paper studies such a regulated market for parmal paddy in the state of Haryana in North India, with a view to address several objectives.[Working Paper No. 94] |
| Keywords: | global trend, government,transition economies, grain markets,foodgrain, parmal paddy, Haryana, North India |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2636&r=reg |
| By: | Tarjei Kristiansen; Juan Rosellón |
| Abstract: | We apply a merchant transmission model to the trilateral market coupling (TLC) arrangement among the Netherlands, Belgium and France as a generic example, and note that it can be applied to any general market splitting or coupling of Europe's different national power markets. In this merchant framework; the system operator allocates financial transmission rights (FTRs) to investors in transmission expansion based upon their preferences, and revenue adequacy. The independent system operator (ISO) preserves some proxy FTRs to deal with potential negative externalities due to an expansion project. This scheme proves to be capable in providing incentives for investment in transmission expansion projects within TLC areas. |
| Keywords: | transmission expansion, trilateral market coupling, Europe, financial transmission rights, congestion management |
| JEL: | L51 L91 L94 Q40 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1028&r=reg |
| By: | Cairns, Alex; Meilke, K. D.; Benett, Nick |
| Abstract: | Since the inception of supply management in Canada during the 1970s, milk production quota has been used to regulate output and participation in the dairy industry. In recent years, milk quota values have increased dramatically, almost tripling in value since the mid-1980s. This led to the Dairy Farmers of Ontario intervening on the milk production quota exchange on two occasions: first, in November 2006 with a progressive transfer assessment and then in July 2009, replacing the former policy with a firm price ceiling â fixing the unit price of quota at $25,000. These policies represent a significant redistribution of economic benefits within the Ontario dairy community from milk producers approaching retirement and selling their quota to those remaining in the industry. The objective of this study is to first explore the reasons for the increase in production quota values; and second, to assess the welfare and distributional effects of each of the two quota policy schemes. Our results suggest that the increase in quota values were driven by basic economic factors expected to influence asset values and that the efficiency losses from intervention in the quota exchange are non-trivial. We conclude by suggesting there are several alternative policy options that could minimize efficiency losses while moderating the escalation in quota values. |
| Keywords: | milk, quota, policy, risk, supply, management, Agricultural and Food Policy, International Relations/Trade, Political Economy, |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:ags:catpwp:91474&r=reg |
| By: | Maschke, Mario; Schmidt, Ulrich |
| Abstract: | This paper focuses on the legal monopoly for sporting bets in Germany. We analyze the pricing behavior of the monopolist ODDSET and find that typical pricing inefficiencies on betting markets are reinforced under the monopoly. This result in conjunction with the decreasing tax revenue may motivate a liberalization of betting markets in Germany. We consider several tax designs for a liberalized market and favor gross earnings as tax base. |
| Keywords: | Glücksspiel; Sport; Monopol; Deregulierung; Vergnügungsteuer; Steuerbemessung; Deutschland; |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ner:ifwkie:info:hdl:10419/32848&r=reg |