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on Regulation |
| By: | Ciara Brown (UCD Centre for Regulation and Governance); Colin Scott (UCD Centre for Regulation and Governance) |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:201044&r=reg |
| By: | Randy Becker |
| Abstract: | This paper examines the impact of environmental regulation on the productivity of manufacturing plants in the United States. Establishment-level data from three Censuses of Manufactures are used to estimate 3-factor Cobb-Douglas production functions that include a measure of the stringency of environmental regulation faced by manufacturing plants. In contrast to previous studies, this paper examines effects on plants in all manufacturing industries, not just those in “dirty” industries. Further, this paper employs spatial-temporal variation in environmental compliance costs to identify effects, using a time-varying county-level index that is based on multiple years of establishment-level data from the Pollution Abatement Costs and Expenditures survey and the Annual Survey of Manufactures. Results suggest that, for the average manufacturing plant, the effect on productivity of being in a county with higher environmental compliance costs is relatively small and often not statistically significant. For the average plant, the main effect of environmental regulation may not be in the spatial and temporal dimensions. |
| Keywords: | environmental regulation, productivity, U.S. manufacturing |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:10-30&r=reg |
| By: | Charlot Olivier; Malherbet Franck (Universite de Cergy-Pontoise, THEMA, F-95000 Cergy-Pontoise.; Universite de Cergy-Pontoise, THEMA, F-95000 Cergy-Pontoise, IZA and fRDB.) |
| Abstract: | In this paper, we generalize the study of the return to education undertaken in e.g. Laing, Palivos and Wang (1995) or Burdett and Smith (2002) to an environment where the link between education and employment stability is taken into account. This enables us to study how an European-like and Employment Protection Legislation (EPL) with heavily regulated long-term contracts and more flexible short-term contracts affects the return to schooling, equilibrium unemployment and welfare. In this context, we show that ¯ring costs and temporary employment have opposite effects on the rate of use of human capital and thus, on educational investments. We furthermore demonstrate that a laissez faire economy with no regulation is inefficient as it is characterized by insufficient educational investments leading to excess job destruction and inadequate job creation. By stabilizing employment relationships, firing costs may spur educational investments and therefore lead to welfare and productivity gains, though a first-best policy would be to subsidize education. However, there is little chance for a dual (European-like) EPL to raise the incentives to schooling and aggregate welfare. |
| Keywords: | human capital; job destruction; matching frictions; efficiency |
| JEL: | I20 J20 J60 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2010-04&r=reg |
| By: | Ben Youssef, Slim |
| Abstract: | We consider a monopolistic firm producing a good while polluting and using a fossil energy. This firm can adopt a clean technology by incurring an investment cost decreasing exponentially with the adoption date. This clean technology does not pollute and has a lower production cost because it uses a renewable energy. We determine the optimal adoption date for the firm in the cases where it is regulated at each period of time and when it is not regulated. Interestingly, the regulated firm adopts the clean technology earlier than what is socially-optimal. However, the non-regulated firm adopts later than what is socially desired. The regulator can compensate the regulated firm for the loss incurred if he wants that it delays its adoption date to the socially-optimal one. Nevertheless, the regulator may be interested in letting the firm adopts earlier to encourage the diffusion of the use of green technologies in other industries. |
| Keywords: | regulation; clean technology; renewable energy; adoption date. |
| JEL: | H57 D62 Q55 Q42 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:25576&r=reg |
| By: | Angel-Urdinola, Diego F.; Kuddo, Arvo |
| Abstract: | This note provides a general background of the main features of labor regulation in the Middle East and North Africa (MENA) and benchmarks them against international best practices. The note compiles information on available labor laws and other legal acts concerning employment protection regulation. Within the broader scope of labor regulation, and in order to assure regional comparability, information collected focuses on key issues in the labor law associated with commencing or terminating employment and during the period of employment (including maternity benefits). The main sources the data are the World Bank doing business 2010 and International Labour Organisation (ILO) databank. This note is a tool to provide policymakers and international organizations with a regional diagnose of how labor regulation affects labor market outcomes in MENA and inform client governments about strategic approaches to employment creation through labor policy and reform. This activity comes as a response to regional priorities in the context of the Arab World Initiative (AWI). One of the six strategic themes of the AWI focuses explicitly on employment creation as a top priority. Part of the World Bank's mandate under the AWI is to inform client governments about strategic approaches to employment creation through labor policy and reform. |
| Keywords: | Labor Markets,Labor Policies,Labor Standards,Work&Working Conditions,Labor Management and Relations |
| Date: | 2010–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:55674&r=reg |
| By: | Snorre Kverndokk and Knut Einar Rosendahl (Statistics Norway) |
| Abstract: | Popular instruments to regulate consumption of oil in the transport sector include fuel taxes, biofuel requirements, and fuel efficiency. Their impacts on oil consumption and price vary. One important factor is the market setting. We show that if market power is present in the oil market, the directions of change in consumption and price may contrast those in a competitive market. As a result, the market setting impacts not only the effectiveness of the policy instruments to reduce oil consumption, but also terms of trade and carbon leakage. In particular, we show that under monopoly, reduced oil consumption due to increased fuel efficiency will unambiguously increase the price of oil. |
| Keywords: | Transport regulations; oil market; monopoly; terms-of-trade effects; carbon leakage |
| JEL: | D42 Q54 R48 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:629&r=reg |
| By: | Sudhir A. Shah |
| Abstract: | The context for this paper is the interaction between a rm that produces and processes durable pollution and a regulator charged with the tasks of (a) employing a mandated technology to process the public stock of pollution, and (b) designing a contract that induces the rm to adopt a socially desirable technology for processing its private pollution stock. [Working Paper No. 84] |
| Keywords: | context, processes, pollution, technology, private |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2962&r=reg |
| By: | Davud Rostam-Afschar |
| Abstract: | The amendment to the German Trade and Crafts Code in 2004 offers a natural experiment to asses the causal effects of this reform on the probabilities of being self-employed and transition into and out of self-employment, using cross-sections (2002-2006) of German microcensus data. This study applies the difference-in-differences technique in logit models for four occupational groups. Easing the educational entry requirement has fostered self-employment significantly for less qualified craftsmen, almost doubling the entry probability, even as exit rates remained unaffected. Weaker effects occur for other occupational groups. These findings have implications for the design of regulations with educational requirements. |
| Keywords: | Regulation, Entrepreneurship, Educational entry requirement, Natural experiment, Craftsmanship |
| JEL: | L51 J24 I28 M13 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1065&r=reg |
| By: | Jamasb, T.; Orea, L.; Pollitt, M.G. |
| Abstract: | The main aim of this paper is to develop an econometric approach to estimation of marginal costs of improving quality of service. We implement this methodology by way of applying it to the case of the UK electricity distribution networks. The estimated marginal costs allow us to shed light on the effectiveness of the current UK incentive regulation to improve quality, and to derive optimal quality levels and welfare losses due to sub-optimal quality levels. The proposed method also allows us to measure the welfare effect of the observed quality improvements in the UK between 1995 and 2003. Our results suggest that while the incentive schemes established by the regulator to encourage utilities to reduce network energy losses leads to improvement in sector performance, they do not provide utilities with sufficient incentives to avoid power interruptions. We find that the observed improvements in quality during the period of this study only represented 30% of the potential customer welfare gains, and hence there was still significant scope for quality improvements. |
| Keywords: | Electricity distribution cost, marginal cost, quality service, and social welfare |
| JEL: | L51 L94 |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1052&r=reg |
| By: | Christian A. L. Hilber (London School of Economics); Frédéric Robert-Nicoud (University of Geneva & Centre for Economic Policy Research (CEPR)) |
| Abstract: | We model residential land use constraints as the outcome of a political economy game between owners of developed and owners of undeveloped land. Land use constraints benefit the former group (via increasing property prices) but hurt the latter (via increasing development costs). More desirable locations are more developed and, as a consequence of political economy forces, more regulated. Using OLS as well as an IV approach that directly follows from our model we find strong and robust support for our predictions at the US metro area level. We conclude from our analysis that land use regulations are suboptimal. |
| Keywords: | Land use regulations, zoning, land ownership, housing supply |
| JEL: | H7 Q15 R52 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2010/9/doc2010-33&r=reg |
| By: | T.A. Bhavani; Suresh D. Tendulkar |
| Abstract: | A major reform process in the Indian economic policy regime away from a four- decade-long inward orientation has been under way since July 1991 in response to a serious macro-economic crisis. The new policy regime aims at liberalising regulations on domestic economic transactions (including private investment) and a much greater integration with the world economy. [Working Paper No. 81] |
| Keywords: | Indian, economic policy, regime, macro-economic crisis, liberalising regulations, economic transactions, world economy |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2964&r=reg |
| By: | James Chapman, Jonathan Chiu, and Miguel Molico |
| Abstract: | We present a model of central bank collateralized lending to study the optimal choice of the haircut policy. We show that a lending facility provides a bundle of two types of insurance: insurance against liquidity risk as well as insurance against downside risk of the collateral. Setting a haircut therefore involves balancing the trade-off between relaxing the liquidity constraints of agents on one hand, and increasing potential inflation risk and distorting the portfolio choices of agents on the other. We argue that the optimal haircut is higher when the central bank is unable to lend exclusively to agents who actually need liquidity. Finally, for an unexpected drop in the haircut, the central bank can be more aggressive than when setting a permanent level of the haircut. |
| Keywords: | Payment, clearing, and settlement systems; Central bank research; Monetary policy implementation; Financial system regulation and policies; Financial services |
| JEL: | E40 E50 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:10-23&r=reg |
| By: | Gagnepain, Philippe (Paris School of Economics-Université Paris 1 and CEPR); Ivaldi, Marc (Toulouse School of Economics); Martimort, David (Paris School of Economics-EHESS) |
| Abstract: | The renegotiation of regulatory contracts is known to prevent regulators from achieving the full commitment efficient outcome in dynamic contexts. However, assessing the cost of such renegotiation remains an open issue from an empirical viewpoint. To address this question, we fit a structural principal-agent model with renegotiation on a set of urban transport service contracts. The model captures two important features of the industry. First, only two types of contracts are used in practice (fixed-price and cost-plus). Second, subsidies increase over time. We compare a scenario with renegotiation and a hypothetical situation with full commitment. We conclude that the welfare gains from improving commitment would be significant but would accrue mostly to operators. |
| JEL: | D86 L51 |
| Date: | 2010–09–14 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:23209&r=reg |
| By: | Triebs, T.P.; Pollitt, M.G.; Kwoka, J.E. |
| Abstract: | This paper studies the impact of divestiture on the efficiency and costs of electric utilities. The empirical literature shows that there exist economies of scope for electric utilities and that divestiture decreases distribution efficiency but increases generation efficiency. This paper is to bring together these different results. Our analysis covers distribution, transmission, and power sourcing. Our data is an unbalanced panel of about 138 US electric utilities for the years 1994 to 2006 over which we observe 30 divestitures between 1997 and 2003. First, we regress firmlevel efficiencies for distribution and power sourcing on various divestiture indicators. Second, we compare the weighted cost between divested and non-divested firms and calculate a net present value for the entire sample of divestitures. Last, we regress net benefits from divestiture on the distribution side on the net benefit for power sourcing to see whether individual firms successfully off-set any costs of divestiture. We find that divestiture reduces distribution efficiency but increases power sourcing efficiency. Both effects depend on the amount of own nuclear generation output but not fossil-fuel or hydro output. The net present value for all divestitures in our sample is $11.3 billion. It seems that relatively lower costs of power outweigh losses in economies of scope as well as other restructuring costs. However, lower costs of power might be the result of favourable contracts put in place at the time of divestiture. Our study complements traditional studies of economies of scope and shows that divestitures might well be worth it. |
| Keywords: | Electric utilities, divestiture, economies of scope, net present value |
| JEL: | L25 L51 L94 |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1049&r=reg |
| By: | Shane B. Evans |
| Abstract: | In this paper a Developer contracts with a Researcher for the production of a non-drastic innovation. Since effort is non-contractible, the Developer offers an incentive contract dependent on the observed magnitude of the innovation. It is shown that the distribution of intellectual property rights (IPR) ownership does not affect the level of effort exerted for innovations where the Developer would choose to license the innovation to its competitors. This is because the possibility of leakage of the innovation through licensing subsidies the Developer's payment when IPR is delegated to the Researcher, while at the same time eroding its profit. |
| JEL: | D23 L24 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:acb:cbeeco:2010-530&r=reg |
| By: | Bruce Blonigen; Benjamin Liebman; Justin Pierce; Wesley Wilson |
| Abstract: | The steel industry has been protected by a wide variety of trade policies, both tariff- and quota-based, over the past decades. This extensive heterogeneity in trade protection provides the opportunity to examine the well-established theoretical literature predicting nonequivalent effects of tariffs and quotas on domestic firms' market power. Robust to a variety of empirical specifications with U.S. Census data on the population of U.S. steel plants from 1967-2002, we find evidence for significant market power effects for binding quota-based protection, but not for tariff-based protection. There is only weak evidence that antidumping protection increases market power. |
| Keywords: | Market structure; Nonequivalence of tariffs and quotas; VRAs; Antidumping; Mini-mills |
| JEL: | F13 F23 L11 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:10-27&r=reg |
| By: | Stocking, Andrew |
| Abstract: | Price controls established in an emissions allowance market to constrain allowance prices between a ceiling and a floor offer a mechanism to reduce cost uncertainty in a cap-and-trade program; however, they could provide opportunities for strategic actions by firms that would result in lower government revenue and greater emissions than in the absence of controls. In particular, when the ceiling price is supported by introducing new allowances into the market, firms could choose to buy allowances at the ceiling price, regardless of the prevailing market price, in order to lower the equilibrium price of all allowances. Those purchases could either be transacted by a group of firms intending to manipulate the market or be induced through the introduction of inaccurate information about the cost of emissions abatement that causes firms to purchase allowances at the ceiling. Theory and simulations using estimates of the elasticity of allowance demand for U.S. firms suggest that the manipulation could be profitable under the stylized setting and assumptions evaluated in the paper, although in practice many other conditions will determine its use. |
| Keywords: | cap-and-trade; climate change; price controls; price ceiling; manipulation; allowance market; carbon market |
| JEL: | D21 H41 Q54 D43 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:25559&r=reg |