|
on Regulation |
| By: | Rexhäuser, Sascha; Rammer, Christian |
| Abstract: | We examine impacts of different types of environmental innovations on firm profits. Following Porter's (1991) hypothesis that environmental regulation can improve firms' competitiveness we distinguish regulation induced and voluntary environmental innovations. We find that innovations which reduce environmental externalities reduce firms' profits, as long as they are induced by regulations. However, innovation that increases a firm's material or energy efficiency in terms of material or energy consumption has a positive impact on profitability. This positive result holds both for regulation induced and voluntary innovations, although the effect is significantly larger for regulation-driven innovation.We conclude that the Porter hypothesis does not hold in general for its 'strong' version but has to be qualified by the type of environmental innovation. Our finding rest on firm level data from the German part of the Community Innovation Survey in 2009. -- |
| Keywords: | Environmental innovation,environmental regulation,Porter hypothesis,competitiveness |
| JEL: | Q55 Q58 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:11036&r=reg |
| By: | Avi Goldfarb; Catherine Tucker |
| Abstract: | Information and communication technology now enables firms to collect detailed and potentially intrusive data about their customers both easily and cheaply. This means that privacy concerns are no longer limited to government surveillance and public figures' private lives. The empirical literature on privacy regulation shows that privacy regulation may affect the extent and direction of data-based innovation. We also show that the impact of privacy regulation can be extremely heterogeneous. Therefore, we argue that digitization means that privacy policy is now a part of innovation policy. |
| JEL: | O31 O38 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17124&r=reg |
| By: | Kingiri, Ann (RIU); Hall, Andy (RIU, LINK, Open University, and UNU-MERIT) |
| Abstract: | Knowledge brokering has been explored in the innovation literature to understand how different innovation tasks are organised toward technological development. This paper reflects upon the role of different organisations as knowledge brokers in regulatory policy processes towards putting biosciences research into use. It identifies a practical function-based typology that describes four categories of policy brokers who perform different tasks, with the potential to impact biosciences regulatory policy change. The paper concludes with a brief exploration of how policy can support the different functions of regulatory policy brokerage to enhance the translation of biosciences research into use for the benefit of the poor. Using regulatory policy-making in Kenya as an example, it contributes to growing scholarship that seeks to link knowledge emanating from research with policy-making and economic development, particularly in an African context. |
| Keywords: | Biosciences, Biotechnology Regulation, Knowledge Brokers, Policy Brokering, Africa, Kenya |
| JEL: | L26 L33 N57 O13 O19 O32 O33 O55 P48 Q12 Q16 Q28 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2011023&r=reg |
| By: | Adrienne M. Ohler (Department of Economics, Illinois State University) |
| Abstract: | Traditional electric utility companies face a trade-off between building generation facilities that utilize renewable energy (RE) and non-renewable energy (non-RE). The firm’s input decision to build capacity for either source depends on several constraining factors, including input prices, policies that promote or discourage RE use, and the type of regulation faced by the firm. This paper models the utility company’s decision between RE and non-RE capital types. From the model, two main results are derived. First, rate-of-return (ROR) regulation decreases the investment in RE capital relative to the unregulated firm. These findings suggest restructuring electricity generation markets, which removes the ROR on generating assets, can increase the relative use of RE. Second, the renewable portfolio standard (RPS) increases the investment in capital and labor that requires RE as a source of electricity, as expected. The model shows that the impact of an RPS depends on the amount of ROR regulation. |
| Keywords: | renewable portfolio standard, renewable energy, rate-of-return regulation |
| JEL: | L2 L51 L94 Q2 Q3 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:ils:wpaper:20110403&r=reg |
| By: | Giovanni Federico (European University Institute, Firenze); Paul Sharp (Department of Economics, University of Copenhagen) |
| Abstract: | We investigate the costs of transportation regulation using the example of agricultural markets in the United States. Using a large database of prices by state of agricultural commodities, we find that the coefficient of variation (as a measure of market integration between states) falls for many commodities until the First World War. We demonstrate that this reflected changes in transportation costs which in turn in the long run depended on productivity growth in railroads. 1920 marked a change in this relationship, however, and between the First and Second World Wars we find considerable disintegration of agricultural markets, ultimately as a consequence of the 1920 Transportation Act. We argue that this benefited railroad companies in the 1920s and workers in the 1930s, and we put forward an estimate of the welfare losses for the consumers of railroad services (i.e. agricultural producers and final consumers). |
| Keywords: | market integration; price convergence; United States; agriculture; transportation regulation |
| JEL: | K23 L51 N5 N7 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:1117&r=reg |
| By: | Skoglund, Jimmy; Chen, Wei |
| Abstract: | The recent incremental risk charge addition to the Basel (1996) market risk amend- ment requires banks to estimate, separately, the default and migration risk of their trading portfolios that are exposed to credit risk. The new regulation requires the total regulatory charges for trading books to be computed as the sum of the market risk capi- tal and the incremental risk charge for credit risk. In contrast to Basel II models for the banking book no model is prescribed and banks can use internal models for calculating the incremental risk charge. In the calculation of incremental risk charges a key compo- nent is the choice of the liquidity horizon for traded credits. In this paper we explore the e¤ect of the liquidity horizon on the incremental risk charge. Speci cally we consider a sample of 28 bonds with di¤erent rating and liquidity horizons to evaluate the impact of the choice of the liquidity horizon for a certain rating class of credits. We find that choosing the liquidity horizon for a particular credit there are two important effects that needs to be considered. Firstly, for bonds with short liquidity horizons there is a miti- gation effect of preventing the bond from further downgrades by trading it frequently. Secondly, there is the possibility of multiple defaults. Of these two effects the multiple default effect will generally be more pronounced for non investment grade credits as the probability of default is severe even for short liquidity periods. For medium investment grade credits these two effects will in general o¤set and the incremental risk charge will be approximately the same across liquidity horizons. For high quality investment grade credits the effect of the multiple defaults is low for short liquidity horizons as the frequent trading effectively prevents severe downgrades. |
| Keywords: | credit risk; incremental risk charge; liquidity horizon; Basel III |
| JEL: | C00 |
| Date: | 2010–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:31535&r=reg |
| By: | Stephens, Eric (University of Alberta, Department of Economics); Thompson, James (University of Waterloo, School of Accounting and Business) |
| Abstract: | In this paper we update the traditional insurance economics framework to incorporate key features of the credit default swap (CDS) market. First, we allow for insurer insolvency, with asymmetric information as to its probability. We find that stable insurers become less stable because they are forced to compete on price. When insurer type is known, increased competition among insurers can create instability for the same reason. Second, we allow the insured party to have heterogeneous motivations for purchasing CDS. For example, some may own the underlying asset and purchase CDS for risk management, while others buy these contracts purely for speculation. We show that speculators will choose to contract with less stable insurers, resulting in higher counterparty risk in this market relative to that of traditional insurance; however, a regulatory policy that disallows speculative trading can, perversely, cause market counterparty risk to increase. Third, we relax the standard assumption of contract exclusivity, which does not apply to the CDS market, by allowing the insured to purchase contracts from many insurers. In contrast to the traditional insurance model, we show that separation of risk type among insured parties can be achieved through insurer choice. We use our model to shed light on the debate over Central Counterparties (CCP). We show that requiring CDS contracts to be negotiated through CCPs can push stable insurers out of the market, mitigating the benefi t of risk pooling. |
| Keywords: | credit default swaps; insurance; counterparty risk; banking; regulation |
| JEL: | D82 G18 G21 G22 |
| Date: | 2011–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2011_009&r=reg |
| By: | Axel Gautier; Per J. Agrell |
| Abstract: | Capture of regulatory agencies by firms or other stakeholders has given rise to a rich literature, much of which is dominated by models in which the motivation for the welfare-reducing behavior is found in side-contracting (bribes, corruption), threats (blackmail, political support) or corresponding mechanisms for repeated games (reputation, career concerns, signaling for promotion). Notwithstanding, the empirical support for monetary corruption and 'revolving doors' is scarce and inconclusive. We propose an alternative and more intuitive model for regulatory capture that is based on information transmission and asymmetric information. In a three-tier model, a regulator is charged by a political principal to provide a signal for the type of a regulated firm. Only the firm can observe his type and the production of a correlated signal with a given accuracy is costly for the regulator. The firm can costlessly provide an alternative signal of lower accuracy that is presented to the regulator. In a self-enforcing equilibrium, the regulator transmits the firm-produced signal, internalizes its own savings in information cost and the firm enjoys higher information rents. The main feature of soft capture is that it is not based on a reciprocity of favors but on a congruence of interests between the firm and the regulator. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:rpp:wpaper:1107&r=reg |
| By: | Reinhart, Carmen; Kirkegaard, Jacob; Sbrancia, Belen |
| Abstract: | Periods of high indebtedness have historically been associated with a rising incidence of default or restructuring of public and private debts. Sometimes the debt restructuring is subtle and takes the form of, “financial repression.” In the heavily regulated financial markets of the Bretton Woods system, a variety of restrictions facilitated a sharp and rapid reduction in public debt/GDP ratios from the late 1940s to the 1970s. In this paper, we summarize our findings for the post-World War II period for a selected group of countries and document the resurgence of financial repression in the wake of the 2007-2009 financial crises and the accompanying surge in public debts in advanced economies. |
| Keywords: | debt; interest rates; regulation; financial repression |
| JEL: | E62 F3 E4 H6 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:31641&r=reg |
| By: | Antonio Capobianco; Hans Christiansen |
| Abstract: | Competitive neutrality implies that no business entity is advantaged (or disadvantaged) solely because of its ownership. The Paper argues that far from all SOEs have the opportunity or the incentives to act in an anti-competitive way, and a trend in recent decades toward more fully corporatised and commercially operating SOEs has no doubt improved overall efficiency. However, problems remain, not least in the network industries where many remaining SOEs are market incumbents that continue to enjoy monopolies in part of their value chains or government subsidies, purportedly in compensation for public service obligations. Renewed concerns about competitive neutrality have also arisen from the market entry of SOEs domiciled in countries where the process of corporatisation has yet to run its full course.<p>To counter these problems some OECD countries as well as the European Union have established specific competitive neutrality frameworks. These frameworks go beyond addressing the anti-competitive behaviour of SOEs, to also establish mechanisms to identify and eliminate such competitive advantages as they may have, including with respect to taxation, financing costs and regulatory neutrality. The experience so far with such formal arrangements is generally encouraging. Jurisdictions that have them have generally been successful in rolling back state subsidies and, on the evidence to date, have obtained significant economic efficiency gains.<p>The Working Paper concludes that a full implementation of the OECD Guidelines on Corporate Governance of State-Owned Enterprises would go a long way in ensuring competitive neutrality. The business activities of currently unincorporated segments of the government sector would become much more competitive and accountable if they were made subject to the Guidelines. For incorporated SOEs the Guidelines also include a portmanteau recommendation of a “level playing field”. However, they offer only limited concrete recommendations on how governments are expected to obtain this outcome in practice. The Guidelines are moreover weakly implemented in a number of countries. |
| Keywords: | competitive neutrality, corporate governance, state-owned enterprises, corporate neutrality, competitive advantages |
| JEL: | G3 G34 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:oec:dafaae:1-en&r=reg |
| By: | Kopp, Robert E.; Mignone, Bryan K. |
| Abstract: | In 2010, the U.S. government adopted its first consistent estimates of the social cost of carbon (SCC) for government-wide use in regulatory cost-benefit analysis. Here, we examine a number of the limitations of the estimates identified in the U.S. government report and elsewhere and review recent advances that could pave the way for improvements. We consider in turn socioeconomic scenarios, treatment of physical climate response, damage estimates, ways of incorporating risk aversion, and consistency between SCC estimates and broader climate policy. -- |
| Keywords: | Climate change,social cost of carbon |
| JEL: | Q54 Q58 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201116&r=reg |
| By: | Cédric Philibert |
| Abstract: | This paper explores the relationships between climate policy and renewable energy policy instruments. It shows that, even where CO2 emissions are duly priced, specific incentives for supporting the early deployment of renewable energy technologies are justified by the steep learning curves of nascent technologies. This early investment reduces costs in the longer term and makes renewable energy affordable when it needs to be deployed on a very large scale to fully contribute to climate change mitigation and energy security. The paper also reveals other noteworthy interaction effects of climate policy and renewable policy instruments on the wholesale electricity prices in deregulated markets, which open new areas for future research. |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ieaaaa:2011/6-en&r=reg |
| By: | Philippe Aghion; Julian Boulanger; Elie Cohen |
| Abstract: | Industrial policy has a bad name: â??picking winnersâ?? and thus distorting competition, while exposing government to capture by vested interests. But there are reasons for a rethink. First, climate change: without government intervention to jump-start massive private investment in clean technologies, governments, by default, encourage investment in dirtier technologies. Second, a new post-crisis realism: laissez-faire complacency by many governments has led to mis-investment in the non-tradable sector at the expense of growth-rich tradables. Third, China â?? and some other emerging economies â?? are big deployers of growth-enhancing sectoral policies. The challenge for Europe is how it can design and govern sectoral policies that are competition-friendly and thus growth-enhancing. |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:bre:polbrf:566&r=reg |