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on Regulation |
| By: | Roychowdhury, Punarjit; Dutta, Mousumi |
| Abstract: | The Informal Economy provides employment to more than 60 per cent of the labour population in the developing world despite being a site unfettered by regulations and social norms of fairness governing pay and work conditions. In assessing the factors behind an informal agent’s decision to formalize, it is asserted that rigidity in regulatory mechanism is the primary cause that impedes the process of formalization. However whether flexible regulations can encourage formalization by making gains of formalization more accessible and certain remains a question. In this paper we argue that flexible regulations does not necessarily manifest into the incentives that are essential for formalization. Reducing rigidities in regulation has a significant pay off only in the ambit of good governance. More specifically we hypothesise that degree of intensity of regulation will hardly matter in containing informality; rather what matters is the quality of governance and capability of the institutions to put the regulations into effect. Using secondary data for 46 countries over the period between 1980 and 2008, we empirically investigate into the linkages between governance, regulation and informal employment by developing static and dynamic panel data models and establish that in curbing informality what turns out to be crucial is the interaction between quality of governance and regulation. |
| Keywords: | Formalization; Governance; Informal Economy; Panel data; Regulation |
| JEL: | O17 O10 O43 C23 C01 |
| Date: | 2011–09–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33775&r=reg |
| By: | Kazuharu Kiyono; Jota Ishikawa |
| Abstract: | This paper studies environmental management policy when two fossil-fuel-consuming countries non-cooperatively regulate greenhouse-gas emissions through emission taxes or quotas. The presence of carbon leakage caused by fuel-price changes affects the tax-quota equivalence. We explore each country's incentive to choose an environment regulation instrument within a framework of a two-stage policy choice game and find subgame-perfect Nash equilibria. This sheds a new light on the question of why adopted policy instruments could be different among countries. We also analyze the welfare effect of creating an international market for emission permits. International trade in emission permits may not benefit the fuel-consuming countries. |
| Keywords: | Global Warming, Carbon Leakage, Emission Tax, Emission Quota, Tax-quota Equivalence, Emission Trading |
| JEL: | F18 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd11-204&r=reg |
| By: | Greenstone, Michael (MIT); Hanna, Rema (Harvard University) |
| Abstract: | Using the most comprehensive data file ever compiled on air pollution, water pollution, environmental regulations, and infant mortality from a developing country, the paper examines the effectiveness of India's environmental regulations. The air pollution regulations were effective at reducing ambient concentrations of particulate matter, sulfur dioxide, and nitrogen dioxide. The most successful air pollution regulation is associated with a modest and statistically insignificant decline in infant mortality. However, the water pollution regulations had no observable effect. Overall, these results contradict the conventional wisdom that environmental quality is a deterministic function of income and underscore the role of institutions and politics. |
| JEL: | H20 O10 Q20 Q50 R50 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp11-034&r=reg |
| By: | Ambec, Stefan (Toulouse School of Economics (INRA-LERNA) and University of Gothenburg); Coria, Jessica (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | We examine the choice of policy instrument price, quantity, or a mix of the two when two pollutants are regulated and firms’ abatement costs are private information. A key parameter that affects this choice is the technological externality between the abatement efforts involved, i.e., whether they are substitutes or complements. If they are complements, a mix policy instrument with a tax on one pollutant and a quota on the other is sometime preferable, even if the pollutants are identical in terms of benefits and costs of abatement. Yet, if they are substitutes, the mix policy is dominated by taxes or quotas.<p> |
| Keywords: | pollution; environmental regulation; policy mixes; tax; emission standard; asymmetric information |
| JEL: | D62 Q50 Q53 Q58 |
| Date: | 2011–09–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0517&r=reg |
| By: | Rita Almeida; Pedro Carneiro (Institute for Fiscal Studies and University College London) |
| Abstract: | <p>Enforcement of labor regulations in the formal sector may drive workers to informality because they increase the costs of formal labor. But better compliance with mandated benefits makes it attractive to be a formal employee. We show that, in locations with frequent inspections workers pay for mandated benefits by receiving lower wages. Wage rigidity prevents downward adjustment at the bottom of the wage distribution. As a result, lower paid formal sector jobs become attractive to some informal workers, inducing them to want to move to the formal sector.</p> |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:cemmap:29/11&r=reg |
| By: | Avdasheva, Svetlana; Goreyko, Nadezhda; Pittman, Russell |
| Abstract: | In 2006, Russia amended its competition law and added the concepts of “collective dominance” and its abuse. This was seen as an attempt to address the common problem of “conscious parallelism” among firms in concentrated industries. Critics feared that the enforcement of this provision would become tantamount to government regulation of prices. In this paper we examine the enforcement experience to date, looking especially closely at sanctions imposed on firms in the oil industry. Some difficulties and complications experienced in enforcement are analyzed, and some alternative strategies for addressing anticompetitive behavior in concentrated industries discussed. |
| Keywords: | competition law; collective dominance; abuse of dominance; Russian Federation |
| JEL: | L13 L41 K21 D43 |
| Date: | 2011–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33742&r=reg |
| By: | Elina De Simone; Alessandro Sapio (-) |
| Abstract: | This paper explores some reasons why the alignment between governance and technology in infrastructures may be unstable or not easy to achieve. Focusing on the electricity industry, we claim that the decentralization of governance – an essential step towards a decentralized technical coordination - may be hampered by if deregulation magnifies behavioural uncertainties and asset specificities; and that in a technically decentralized system, political demand for centralized coordination may arise if the players are able to collude and lobby, and if such practices lead to higher electricity rates and lower efficiency. Our claims are supported by insights coming from approaches as diverse as transaction cost economics, the competence-based view of the firm, and political economy. |
| Keywords: | Governance; Technology; Coherence; Competence; Transaction costs; Regulation. |
| JEL: | D23 L43 L94 M20 O31 |
| Date: | 2011–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:prt:dpaper:6_2011&r=reg |
| By: | Schöb, Ronnie; Thum, Marcel |
| Abstract: | Individual labour productivities are often unobservable for firms when hiring new workers. Job protection may prevent firms ex post from using information about labour productivities. We show that a binding minimum wage introduced in the presence of job protection will lead to lower unemployment levels than predicted by the standard labour market model with heterogeneous labour and full information. -- |
| Keywords: | Minimum wages,unemployment,hidden information,labour market regulation |
| JEL: | J2 J3 H5 L5 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:201114&r=reg |
| By: | David A. Weisbach (University of Chicago) |
| Abstract: | The current pricing mechanism for carbon in the EU, the EU emissions trading system, only covers 40 percent of emissions. Carbon taxation currently plays no role. The Commission has recently proposed to revise the energy tax system in the EU to include a carbon tax component. This paper evaluates the Commission proposal and considers the possible expansion of the EU carbon pricing base either by expanding emissions trading to cover more sectors or by enacting a carbon tax. It concludes that there are strong arguments for expanding the carbon pricing base, as suggested by the Commission. Nevertheless, expanding the base should done through a unified system, such as expanding the coverage of the emissions trading system or enacting an economywide carbon tax rather than through having side-by-side taxes and trading, as in the Commission proposal. |
| Keywords: | Carbon Tax |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:1115&r=reg |
| By: | Roldan, Flavia (IESE Business School) |
| Abstract: | This paper studies the effectiveness of two different antitrust policies by characterizing the network structure of market-sharing agreements that arises under those settings. Market-sharing agreements prevent firms from entering each other's market. The set of these agreements defines a collusive network, which is pursued by antitrust authorities. This article shows that under a constant probability of inspection and a penalty equal to a firm's limited liability, firms form collusive alliances where all of them are interconnected. In contrast, when the antitrust policy reacts to prices in both dimensions - probability of inspection and penalty - firms form collusive cartels where they are not necessarily fully interconnected. This implies that more competitive structures can be sustained in the second case than in the first case. Notwithstanding, antitrust laws may have a pro-competitive effect in both scenarios, as they give firms in large alliances more incentives to cut their agreements at once. |
| Keywords: | market-sharing; economic networks; antitrust authority; oligopoly; |
| JEL: | D43 K21 L41 |
| Date: | 2011–07–07 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0932&r=reg |
| By: | Kathryn Chen; Michael Fleming; John Jackson; Ada Li; Asani Sarkar |
| Abstract: | Ongoing regulatory reform efforts aim to make the over-the-counter derivatives market more transparent by introducing public reporting of transaction-level information, including price and volume of trades. However, to date there has been a scarcity of data on the structure of trading in this market. This paper analyzes three months of global credit default swap (CDS) transactions and presents findings on the market composition, trading dynamics, and level of standardization. We find that trading activity in the CDS market is relatively low, with a majority of reference entities for single-name CDS trading less than once a day. We also find that a high proportion of CDS transactions conform to standardized contractual and trading conventions. Examining the dealer’s role as market maker, we find that large trades with customers are generally not rapidly offset by further trades in the same reference entity, suggesting that hedging of large positions, if taking place, occurs over a longer time horizon. Through our analysis, we provide a framework for regulators and policymakers to consider the design of the public reporting regime and the necessary improvements to data collection to facilitate meaningful price reporting for credit derivatives. |
| Keywords: | Credit derivatives ; Disclosure of information ; Hedging (Finance) ; Swaps (Finance) ; Regulatory reform |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:517&r=reg |
| By: | Matthew Rennie; Fiona Lindsay |
| Abstract: | This working paper provides a comprehensive overview of the competitive neutrality framework of the Australian Commonwealth as well as individual States. It reviews the history behind the framework and provides examples of cases brought before the respective complaints handling offices. Finally, the paper draws conclusions regarding the successes and failures of the Australian framework and its applicability to other jurisdictions. The working paper argues that Australia.s competitive neutrality framework can be viewed as highly successful overall. However, the success can probably only be copied by other countries if these are willing to undertake similarly profound reforms as were engendered as part of the Australian competition reforms in the 1990s with the active participation of the Productivity Commission. The factors behind Australia.s apparent success include: a reform program that applied both to SOEs and to specific industries; the flexibility to apply the framework differently in different geographic contexts; anchoring the commitment to competitive neutrality in strong administrative processes; regular reviews and reporting by individual jurisdictions on the progress of their reforms; clarity in communication to enhance a nationwide understanding of the goals and mechanisms to achieve those goals; transparent public benefit tests to establish the boundaries between commercial and non-commercial public activities; and transparent and politically independent review processes. |
| Keywords: | competition policy, competitive neutrality, corporate governance, state-owned enterprises, competitive advantages, sectoral reforms |
| JEL: | G30 G34 L4 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:oec:dafaae:4-en&r=reg |
| By: | Dietrich, Antje-Mareike; Sieg, Gernot |
| Abstract: | This article shows that in the presence of environmental externalities, it may be welfare enhancing to overcome a technological lock-in by a dead- end technology through governmental intervention. It is socially desirable to subsidize a dead-end technology if its environmental externality is small relative to the one of the established technology, if the installed base and/or the strength of the network effect is small and if future generations matter. Applying our results to the private transport sector, governments promoting alternatives to gasoline-driven vehicles have to be aware of these opposing welfare effects. |
| Keywords: | environmental externalities; network effects; private transport; technological change |
| JEL: | L92 Q55 O33 |
| Date: | 2011–09–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33780&r=reg |
| By: | Erdogdu, Erkan |
| Abstract: | More than half of the countries in the world have introduced a reform process in their power sectors and billions of dollars have been spent on liberalizing electricity markets around the world. Ideological considerations, political composition of governments and educational/professional background of leaders have played and will play a crucial role throughout the reform process. Adapting a political economy perspective, this paper attempts to discover the impact of political economy variables on the liberalization process in electricity markets. Empirical models are developed and analyzed using panel data from 55 developed and developing countries covering the period 1975–2010. The research findings suggest that there is a significant negative relationship between electricity market liberalization and the size of industry sector, meaning that countries with larger industry sectors tend to liberalize less. Also, we detect a negative correlation between polity score and power sector liberalization, that is; it cannot be argued that liberalization policies are stronger in more democratic countries. On the other hand, our results imply that countries that receive foreign financial aid or assistance are more likely to liberalize their electricity markets. In OECD countries, single-party governments accelerate the reform process by reducing public ownership and vertical integration. Moreover, we detect a negative relationship between the years the chief executive has been in office and the reform progress in OECD countries. Furthermore, we identify a decrease in vertical integration in electricity industry during the terms of parties with “right” or “left” ideologies in OECD countries. Additionally, professional and educational background of head of executive branch (prime minister, president and so on) seem to have very significant impact on reform process in OECD countries, but this is not the case in non-OECD countries. Leaders with a professional background as entrepreneurs speed up electricity market liberalization process in OECD countries while those with a background as economists slow it down. As for educational background, the reforms seem to progress slower in OECD countries if the head of executive has an educational background in economics or natural science. As a final point, the study suggests that EU or OECD membership, the existence of electricity market reform idea, population density, electricity consumption, income level, educational level, imports of goods and services (as % of GDP) and country specific features have a strong correlation with liberalization process in electricity markets. |
| Keywords: | Electric utilities; industrial policy; political economy |
| JEL: | F59 L52 L94 C33 |
| Date: | 2011–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33724&r=reg |