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on Regulation |
| By: | Rennings, Klaus; Rammer, Christian |
| Abstract: | The impact of environmental innovations on firm performance is ambiguous. On the one hand, regulatory-driven environmental innovation may impose additional costs to firms and lower their profits. On the other hand, eco-innovators could profit from lower uncertainty in innovation due to regulatory standards and demand-generating effects of regulation. In this paper we analyse (a) whether regulation-driven environmental innovation generate similar innovation success compared to other types of product and process innovation, and (b) whether regulation-driven environmental innovation increase or decrease firm success (as measured by return on sales). Using firm data from the German innovation survey, we find that both product and process innovations driven by environmental regulation generate similar success in terms of sales with new products and cost savings as other innovations do. However, we find different effects when looking on the field of environmental regulation that triggered innovations. Regulations in favour of sustainable mobility contribute to higher sales with market novelties while regulations in the field of water management lower this type of innovation success. With regard to a firm’s price-cost margin, new processes implemented in order to comply with environmental regulation requirements lower profitability, indicating higher costs for this type of innovation which cannot be passed on prices. Higher profit margins can be observed for firms with innovations triggered by regulations on recycling and waste management as well as on resource efficiency. -- |
| JEL: | Q55 Q58 L51 O31 L25 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:10065&r=reg |
| By: | Helland, Eric; Klick, Jonathan |
| Abstract: | In the United States insurance is regulated both by state insurance commissions and class action litigation. The interaction of these two systems has not been extensively studied. We examine four different facets of the regulation litigation tradeoff. The first is to examine whether regulator’s interest in a particular cause of action reduces the likelihood that class actions covering this cause of action will be filed in the regulator’s home state. We also examine several measures of regulatory stringency in the state to determine whether there is a substitution effect between regulatory action and litigation. We also examine whether class actions are less frequent when regulators issued an administrative decision on a particular issue previously or if there are no existing state laws on the particular issue. We examine the impact of electing judges on patterns of filing. The hypothesis is that elected judges are more sympathetic to plaintiffs and hence class actions are more likely to be filed in states that elect their judges. Lastly, we examine the impact of pervious litigation both in the state and the specific line of litigation. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:32&r=reg |
| By: | Noel, Pierre |
| Abstract: | We welcome the European Commission's proposal for a Regulation on the security of gas supply which, it is hoped, will be agreed at the Energy Council in May. The Regulation aims to help member states improve their gas security policies as ECFR argued the EU should do in a Policy Brief published before the gas crisis of January 20091. However, there remain some problems with the proposed Regulation, in particular the mechanism through which member states will be required to devise and implement gas security policies. This note aims to outline how these problems can be resolved. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:34&r=reg |
| By: | Dewenter, Ralf; Kruse, Jörn |
| Abstract: | This paper analyzes the impact on mobile telephony diffusion patterns of the two predominant payment regimes, calling party pays (CPP) and receiving party pays (RPP), for mobile termination services. By applying instrumental variable techniques to panel data we account for a possible interdependency of penetration rates and regulatory interventions. For this purpose we use data on political and institutional factors to instrument endogenous regulatory decisions. We conclude from our empirical analysis that there is no significant impact of either RPP or CPP on penetration rates. Therefore an application of RPP in order to obviate regulation of termination fees would be feasible. -- |
| Keywords: | mobile telephony markets,calling-party-pays,mobile termination fees,endogenous regulation |
| JEL: | L1 L5 L96 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:10&r=reg |
| By: | Rennings, Klaus; Rexhäuser, Sascha |
| Abstract: | This paper analyses two aspects of environmental regulations triggered by ecoinnovations. First, whether there are long term effects of regulation on innovation. Second, whether the impact of different types of regulation differ by type of the environmental benefit of the innovations. To answer these questions, the paper uses firm level data from the German part of the Community Innovation Survey 2009, in which companies were asked to cite the respective regulations to be responsive for the firms' introduced environmental related innovations. Regulations quoted by firms are classified into several policy types and also the age the respective regulations are calculated. We find evidence for long-term effects of environmental regulation on innovation. Furthermore, different types of regulations varied with respect to their impact on several environmental benefits of innovations. -- |
| Keywords: | environmental policy,environmental innovation,innovation surveys |
| JEL: | Q55 Q58 Q01 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:10074&r=reg |
| By: | Fremeth, Adam R.; Holburn, Guy L. F. |
| Abstract: | We argue that information asymmetries between regulators and firms increase the administrative decision costs of initiating new policies due to the costs of satisfying evidentiary or ‘‘burden of proof’’ requirements. We further contend that regulators with better information about regulated firms—that is, with lower information asymmetries—have lower decision costs, thereby facilitating regulator policy making. To empirically test our predictions, we examine the relationship between regulatory informational environments and changes to regulated rates for all investor-owned electric utilities from 1980 to 2000. We exploit several natural sources of variation in the informational environments of US state utility regulators. These stem from the prior experiences and administrative resources of regulators, observable policy decisions of other regulatory agencies for a given utility, and differences in procedural regulations pertaining to rate increases and decreases. Our results suggest that as regulators acquire more information about utility operations, including from experience in office, they are more likely to enact rate decreases and less likely to implement rate increases. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:595&r=reg |
| By: | Alemanno, Alberto; Wiener, Jonathan B. |
| Abstract: | ‘Quis custodiet ipsos custodes?’ asked the Roman poet Juvenal – ‘who will watch the watchers, who will guard the guardians?’1 As legislative and regulatory processes around the globe progressively put greater emphasis on impact assessment and accountability, (Verschuuren and van Gestel 2009, Hahn and Tetlock 2007), we ask: who oversees the regulators? Although regulation can often be necessary and beneficial, it can also impose its own costs. As a result, many governments have embraced, or are considering embracing, regulatory oversight--frequently relying on economic analysis as a tool of evaluation.We are especially interested in the emergence over the last four decades of a new set of institutional actors, the Regulatory Oversight Bodies (ROBs). These bodies tend to be located in the executive (or sometimes the legislative) branch of government. They review the flow of new regulations using impact assessment and benefit-cost analysis, and they sometimes also appraise existing regulations to measure and reduce regulatory burdens. Through these procedures of regulatory review, ROBs have become an integral aspect not only of regulatory reform programs in many countries, but also of their respective administrative systems. Although most academic attention focuses on the analytical tools used to improve the quality of legislation, such as regulatory impact assessment (RIA) or benefit-cost analysis, this chapter instead identifies the key concepts and issues surrounding the establishment and operation of ROBs across governance systems. It does so by examining and comparing the oversight mechanisms that have been established in the United States and in the EU and by critically looking into their origins, rationales, mandates, institutional designs and scope of oversight. |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:43&r=reg |
| By: | Markus Lang; Marc Laperrouza; Matthias Finger |
| Abstract: | This paper presents a game-theoretic model of a liberalized railway market, in which train operation and ownership of infrastructure are vertically separated. We analyze how the regulatory agency will optimally set the charges that operators have to pay to the infrastructure manager for access to the tracks and how these charges change with increased competition in the railway market. Our analysis shows that an increased number of competitors in the freight and/or passenger segment reduces prices per kilometer and increases total output in train kilometers. The regulatory agency reacts to more competition with a reduction in access charges in the corresponding segment. Consumers benefit through lower prices, while the effect on the operators' profits is ambiguous and depends on the degree of competition. We further show that social welfare always increases through more competition in the freight and/or passenger segment. Finally, social welfare is higher under two-part tariffs than under one-part tariffs if raising public funds is costly to society. |
| Keywords: | Access charge, optimal pricing, railways, regulation, vertical integration |
| JEL: | D40 L22 L51 L92 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:chc:wpaper:0025&r=reg |
| By: | DeMuth, Christopher |
| Abstract: | This Review follows the structure of Retaking Rationality. In Part I we criticize the book’s narrative (summarized above) as cartoonish and unhistorical—we think it is confusing rather than helpful to understanding recent developments and controversies in cost-benefit analysis and the organization of regulatory decisionmaking within the executive branch. In Part II we consider the book’s “Eight Fallacies of Cost-Benefit Analysis.” We find that these discussions are generally well informed and interesting but suffer from the effort to squeeze cost-benefit issues into the antiregulation-versusproregulation narrative; moreover the discussions are often excessively abstract and ambitious concerning the function of cost-benefit analysis, and they entirely fail to support the thesis that cost-benefit fallacies have been used to defeat beneficial regulations. Finally, in Part III we discuss the authors’ arguments about the need for and practice of OMB/OIRA oversight of agency rulemaking. Here we criticize as naïve the book’s argument that there is no need for an institutional counterweight to agency parochialism and that OIRA’s role should be recast as one of coordination, calibration, and promotion of a proregulatory agenda against the forces of agency sloth. A concluding Part sums up our arguments. |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:573&r=reg |
| By: | Kaiser, Ulrich; Mendez, Susan J.; Rønde, Thomas |
| Abstract: | On April 1, 2005, Denmark changed the way references prices, a main determinant of reimbursements for pharmaceutical purchases, are calculated. The previous reference prices, which were based on average EU prices, were substituted to minimum domestic prices. Novel to the literature, we estimate the joint effects of this reform on prices and quantities. Prices decreased more than 26 percent due to the reform, which reduced patient and government expenditures by 3.0 percent and 5.6 percent, respectively, and producer revenues by 5.0 percent. The prices of expensive products decreased more than their cheaper counterparts, resulting in large differences in patient benefits from the reform. -- |
| Keywords: | pharmaceutical markets,regulation,co-payments,reference pricing,asymmetric welfare effects |
| JEL: | I18 C23 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:10062&r=reg |
| By: | Hahn, Robert W. |
| Abstract: | In response to the increasing impact of laws and regulations, several governments have introduced economic analysis as a way of improving regulatory decision making. This paper provides the first comprehensive assessment of governmentsupported economic analysis of laws and regulations. It also reviews the changing role of economic analysis in regulatory decision making. I find that there is growing interest in the use of economic tools, such as benefit–cost analysis; however, the quality of analysis in the U.S.A. and European Union frequently fails to meet widely accepted guidelines. Furthermore, the relationship between analysis and policy decisions is tenuous. To address this situation, I recommend alternative legal and institutional frameworks that could allow economics to play a more central role in regulatory decision making. In addition, I suggest that prediction markets could help improve regulatory policy. Published in the International Review of Environmental and Resource Economics: Vol. 3:No 4, 2010, pp. 245-298. |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:611&r=reg |
| By: | Emma Aisbett; Larry Karp; Carol McAusland |
| Abstract: | International investment agreements in bilateral treaties or free trade agreements allow investors to bring compensation claims when their investments are hurt by new regulations addressing environmental or other social concerns. Compensation rules such as expropriation clauses in international treaties help solve post-investment moral hazard problems such as hold-ups, thereby helping to prevent inefficient over-regulation and encouraging foreign investment. However, when social or environmental harm is uncertain preinvestment, compensation requirements can interact with National Treatment clauses in a manner that reduces host government welfare and makes them less likely to admit investment. A police powers carve-out from the definition of compensable expropriation can be Pareto-improving and can increase the level of foreign investment. |
| Keywords: | foreign direct investment, regulatory takings, expropriation, international investment agreements, National Treatment, environment |
| JEL: | K3 Q58 F21 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:auu:dpaper:648&r=reg |
| By: | Herr, Annika |
| Abstract: | Hospital markets are often characterised by price regulation and the existence of different ownership types. Using a Hotelling framework, this paper analyses the effect of heterogeneous objectives of the hospitals on quality differentiation, profits, and overall welfare in a price regulated duopoly with exogenous symmetric locations. In contrast to other studies on mixed duopolies, this paper shows that in this framework privatisation of the public hospital may increase overall welfare. This holds if the public hospital is similar to the private hospital or less efficient and competition is low. The main driving force is the single regulated price which induces under-(over-)provision of quality of the more (less) efficient hospital compared to the first-best. However, if the public hospital is sufficiently more efficient and competition is fierce, a mixed duopoly outperforms both a private and a public duopoly due to an equilibrium price below (above) the price of the private (public) duopoly. This medium price discourages overprovision of quality of the less efficient hospital and - together with the non-profit objective - encourages an increase in quality of the more efficient public hospital. -- |
| Keywords: | mixed oligopoly,price regulation,quality,hospital competition |
| JEL: | L13 I18 H42 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:07&r=reg |
| By: | Rosellon, Juan; Tregear, Juan; Zenon, Eric |
| Abstract: | This paper presents an application of a mechanism that provides incentives to promote transmission network expansion in the electricity system of the Ontario province. Such a mechanism combines a merchant approach with a regulatory approach. It is based on the rebalancing of a two-part tariff within the framework of a wholesale electricity market with nodal pricing. The expansion of the network is carried out through auctions of financial transmission rights for congested links. The mechanism is tested for a simplified transmission grid with ten interconnected zones, ten nodes, eleven lines and seventy eight generators in the Ontario province. The simulation is carried out for both peak and non-peak scenarios. Considering Laspeyres weights, the results show that that prices converge to the marginal cost of generation, the congestion rent decreases, and the total social welfare increases. |
| Keywords: | Keywords: Electricity transmission; financial transmission rights (FTRs); incentive regulation; loop-flow problem; nodal prices; Ontario |
| JEL: | L51 L91 L94 Q40 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:26471&r=reg |
| By: | Hahn, Robert W.; Stavins, Robert N. |
| Abstract: | We examine an implication of the “Coase Theorem” which has had an important impact both on environmental economics and on public policy in the environmental domain. Under certain conditions, the market equilibrium in a cap-and-trade system will be cost-effective and independent of the initial allocation of tradable rights. That is, the overall cost of achieving a given aggregate emission reduction will be minimized, and the final allocation of permits will be independent of the initial allocation. We call this the independence property. This property is very important because it allows equity and efficiency concerns to be separated in a relatively straightforward manner. In particular, the property means that the government can establish the overall pollution-reduction goal for a cap-and-trade system by setting the cap, and leave it up to the legislature – such as the U.S. Congress – to construct a constituency in support of the program by allocating the allowances to various interests without affecting either the environmental performance of the system or its aggregate social costs. Our primary objective in this paper is to examine the conditions under which the independence property is likely to hold – both in theory and in practice. A number of factors can call the independence property into question theoretically, including market power, transaction costs, non-cost-minimizing behavior, and conditional allowance allocations. We find that, in practice, there is support for the independence property in some, but not all cap-and-trade applications. |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:47&r=reg |
| By: | Bouckaert J.; van Dijk Th.; Verboven F. |
| Abstract: | The evolution of broadband penetration has shown substantial differences between OECD countries. This paper empirically investigates to what extent different forms of regulated competition explain these international differences. Three modes of competition are distinguished between broadband internet access providers that result from regulatory policies: (1) inter-platform competition; (2) facilities-based intra-platform competition; and (3) service-based intra-platform competition. In most countries these forms of competition co-exist although their intensity varies from country to country. Intra-platform competition may differ among countries depending on the degree of mandatory access obligations imposed by the regulator on the dominant network firm. Based on a sample of OECD countries, inter-platform competition has been a main driver of broadband penetration. The two types of intra-platform competition have a considerably smaller effect on broadband penetration. Linking these findings back to access regulation suggests that the “stepping stone” or “ladder of investment” theories might not provide the justification to impose extensive mandatory access obligations on DSL incumbents. |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:ant:wpaper:2010020&r=reg |
| By: | Sophie Legras |
| Abstract: | This paper analyses the consequences of environmental myopia on pol- icy design in a multi-pollutants framework. Focusing on the correlations between aerosols and greenhouse gases, the paper compares abatement and stock targets setting for various cases of environmental myopia. Both cases of lax and stringent regulation, compared to what is socially opti- mum, may arise. Furthermore, the lax/stringent nature of the policies may evolve over time, so that the time horizon of policy design matters in assessing the impact of environmental myopia. |
| Keywords: | Atmospheric pollution, Global warming, Policy design, Incomplete environmental model, Multiple stocks |
| JEL: | Q53 Q54 Q58 |
| Date: | 2010–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:ceo:wpaper:26&r=reg |
| By: | Louis Hotte (Department of Economics, University of Ottawa, Ottawa, ON) |
| Abstract: | We study the political economy of the environment in autocratic, weak and strong democracies when individuals can either mitigate the health consequences of domestic pollution privately or reduce pollution collectively through public policy. The setting is that of a small open economy in which incomes depend importantly on trade in dirty goods, where income inequality and the degree to which ordinary citizens exert voice in each dimension of the policy process distinguishes elites and ordinary citizens. The recognition that the health consequences of pollution can be dealt with privately at a cost adds an important dimension to the analysis of the political economy of environmental regulation, especially for an open economy. When private mitigation is feasible, inequality of incomes leads to an unequal distribution of the health burden of pollution (in accordance with the epidemiologic evidence), thus polarizing the interests of citizens in democracies and of ordinary citizens and elites in non-democratic regimes. Inequality in the willingness to bear the cost of private mitigation in turn interacts with the pollution costs and income benefits of trade in dirty goods to further polarize interests concerning both environmental stringency and the regulation of trade openness. In this context, we show how the eco-friendliness ranking of different political regimes varies with the cost of private mitigation and with the extent of income inequality, tending to converge when mitigation costs are high, and even producing a ranking reversal between democracies and autocracies, and between weak and strong democracies, when costs lie in an intermediate range. |
| Keywords: | pollution, environmental regulation, private mitigation, income inequality, democracy, trade, welfare, collective choice, political economy |
| JEL: | C7 D7 F18 Q56 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ott:wpaper:1007e&r=reg |
| By: | Alemanno, Alberto |
| Abstract: | More than twenty years after the EU eliminated its internal land borders, the Union still lacks an integrated airspace. This seems to be the most immediate regulatory lesson of the recent volcanic ash crisis. Yet more research is needed before establishing its net effects. In this brief report, I will provide a first-hand analysis of the regulatory answer developed across Europe in the aftermath of the eruption of the Icelandic volcano Eyjafjallajökull. While reconstructing the unfolding of the events and the procedures followed by the regulators, I will attempt to address some of the questions that I have repeatedly asked myself when stranded in Washington DC between 16 and 25 April 2010. Who did the assessment of the hazard posed by volcanic ash to jetliners? Who was competent to take risk management decisions, such as the controversial flight bans? Is it true that the safe level of volcanic ash was zero? How to explain the shift to a new safety threshold (of 2,000 mg/m3) only five days after the event? Did regulators overact? To what extent did they manage the perceived risk rather than the actual one? At a time when the impact of the volcanic ash cloud crisis is being closely scrutinised by both public authorities and the affected industries, it seems particularly timely to establish what happened during the worst aviation crisis in European history. This report was written one week after the event and relied on a limited number of sources available by 30 April 2010. |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:585&r=reg |
| By: | Zenon, Eric; Rosellon, Juan |
| Abstract: | We present a hybrid mechanism application for the electrical system network expansion in Mexico, United States and Canada. The application is based on redefining the transmission output in terms of "point-to-point" transactions or financial transmission rights (FTRs); rebalancing the fixed and variable parts of a two-part tariff; as well as in the use of nodal pricing. The expansion of the transmission is carried out through the sale of FTRs for the congested electrical lines. The mechanism was tested in the national electric system of Mexico (SEN) with 24 nodes and 35 power line, in the Pennsylvania-New Jersey-Maryland (PJM) grid with 17 nodes and 31 lines, and finally in the Ontario network with 10 nodes and 10 lines. The results thereof indicate that prices converge to the marginal generation cost, congestion decreases and the social benefit increases in the three systems, regardless of the organization of the electrical system, the network topology or the type of installed generation capacity |
| Keywords: | Electricity transmission; financial transmission rights (FTRs); incentive regulation; loop-flow problem; nodal prices |
| JEL: | L51 L91 L94 Q40 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:26470&r=reg |
| By: | Origo, Federica (University of Bergamo); Lucifora, Claudio (Università Cattolica del Sacro Cuore) |
| Abstract: | In recent years many countries of the European Union (EU) have implemented comprehensive smoking bans to reduce exposure to tobacco smoke in public places and all indoor workplaces. Despite the intense public debate, research on the impact of smoking regulation on health, particularly within the workplace, is still very limited. In this paper, we use a Diff-in-Diff approach and comparable micro-data – for a large number of European countries – to evaluate the impact of national comprehensive smoking bans on both perceived workers' health and presence of respiratory problems within workplaces. Results show that the introduction of comprehensive smoking bans has a significant effect on workers' perceived health, particularly on the probability of exposure to smoke and fumes, also controlling for risk exposure. We also highlight some unintended effects of smoking bans in terms of mental distress, which counteract the positive impact on risk exposure and physical health. The impact across countries is shown to vary with the degree of strictness of the bans. |
| Keywords: | smoking bans, workers health, difference-in-differences |
| JEL: | I18 J28 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5290&r=reg |
| By: | Paul Waide |
| Abstract: | Since early 2007 almost all OECD and many non-OECD governments have announced policies aimed at phasing-out incandescent lighting within their jurisdictions. This study considers the implications of these policy developments in terms of demand for regulatory compliant lamps and the capacity and motivation of the lamp industry to produce efficient lighting products in sufficient volume to meet future demand. To assess these issues, it reviews the historic international screw-based lamp market, describes the status of international phase-out policies and presents projections of anticipated market responses to regulatory requirements to determine future demand for CFLs. |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ieaaaa:2010/5-en&r=reg |
| By: | Winston, Clifford |
| Abstract: | In Last Exit Clifford Winston reminds us that transportation services and infrastructure in the United States were originally introduced by private firms. The case for subsequent public ownership and management of the system was weak, in his view, and here he assesses the case for privatization and deregulation to greatly improve Americans’ satisfaction with their transportation systems. Chapters 1 and 5 are included here as a preview. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:618&r=reg |
| By: | Haucap, Justus; Coenen, Michael |
| Abstract: | -- |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:diceop:01&r=reg |