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on Regulation |
| By: | Richard Stewart |
| Abstract: | This essay provides an overview of enforcement mechanisms and issues in transnational public regulation. Regimes of transnational regulation (environment, finance, security, intellectual property, etc.) established by states and networks of domestic government officials use a variety of regulatory instruments, including economic incentives. Lack of consistent enforcement undermines the efficacy of these regimes. The paper examines legal remedies, including those provided by Global Administrative Law, that may be asserted against domestic and international administrative bodies in order to address enforcement gaps in transnational regulation. These include remedies invoked by the beneficiaries of regulatory regime to promote enforcement and regulatory protection by such bodies. |
| Date: | 2011–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:erp:euirsc:p0293&r=reg |
| By: | Xiao, Fenglong |
| Abstract: | Regulatory policy is a considerable factor in organizational business strategy decisions. This article focuses on the organizational adjustment cost under uncertainty brought by regulation from game theory and contract theory perspective. Three conclusions are reached: 1. The cost of adjustment of organizations under regulation in a monopolized industry is only affected by their own risk tolerance of uncertainty and the cost of information; 2. when the regulation is enacted in a more competitive market, the cost of information would raise with a higher expected loss comparing with the same regulation in monopolized market; 3. If the claim of such measurement is true, the net benefit or loss of regulation is exactly the difference between organizational information cost and regulatory benefit. So the policy that guarantees the positive communication and transparent information exchange that helps to reduce the organizational information cost is necessary for an efficient regulatory policy. |
| Keywords: | Regulation; Organization; Contract; Uncertainty |
| JEL: | D81 L51 L22 |
| Date: | 2011–05–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:36240&r=reg |
| By: | Geoffrey Miller |
| Abstract: | This paper considers the topic of private regulation and enforcement for internationally active financial services firms. The paper documents the following types of regulation and enforcement that involve significant private input: house rules, contracts, internal compliance, management-based regulation, private standard-setting bodies, cartels, and private litigation. The paper assesses these systems or modalities along the dimensions of effectiveness, legitimacy, quality, and enforcement. The paper suggests that the following factors (among others) will contribute to determining the pattern of private/public interaction in a given regulatory context: (1) minimization of transactions costs; (2) access to information; (3) expertise; (4) political power of the regulated industry; (5) contests over regulatory turf; (6) regulatory budget constraints, and (7) history or path-dependence. The topic of financial private regulation and enforcement concerns the activities of private firms in the financial sector which are involved in cross-border activities – Citigroup, Bank of America, HSBC, UBS, JPMorgan Chase, RBS, BNP Paribas, Barclays, Morgan Stanley, Goldman Sachs, Deutsche Bank, HBOS, Société Générale, Banco Santander, American Express, Nomura, and so on. For convenience of reference, I will refer to this type of organization as an internationally active financial services firm (IAFSF). This paper will categorize different types of private regulation and enforcement applicable to IAFSFs and then will offer some tentative thoughts about the underlying forces that may determine the phenomena under observation, with special reference to the HiiL Concept Paper, The Added Value of Private Regulation in an Internationalised World? Towards a Model of the Legitimacy, Effectiveness, Enforcement and Quality of Private Regulation. The principal subject of investigation will be the activities of IAFSFs under U.S. law, but attention will be given to international standards and regulations as well. |
| Date: | 2011–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:erp:euirsc:p0294&r=reg |
| By: | Burtraw, Dallas (Resources for the Future); Fraas, Arthur G. (Resources for the Future); Richardson, Nathan (Resources for the Future) |
| Abstract: | EPA is in the process of regulating U.S. greenhouse gas (GHG) emissions using its powers under the Clean Air Act. The likely next phase of this regulatory program is performance standards under Section 111 of the act for coal plants and petroleum refineries, which the agency has committed to finalize by the end of 2012. Section 111 appears to allow use of flexible, market-based regulatory tools. In this paper, we discuss one such tool, tradable standards. Tradable standards appear to be a legally and politically viable choice for the agency, and evidence suggests they are substantially more cost-effective than traditional performance standards. The paper discusses implementation issues with tradable standards, including categorization, banking, and phased implementation, as well as broader issues with the Section 111 rulemaking process as it relates to state-level GHG regulatory efforts. |
| Keywords: | averaging, flexibility, regulatory design, market-based regulation |
| JEL: | Q54 Q58 |
| Date: | 2012–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-12-05&r=reg |
| By: | Ojo, Marianne |
| Abstract: | Why should differences between regulatory and accounting policies be mitigated? Because mitigating such differences could facilitate convergence – as well as financial stability. The paper “Fair Value Accounting and Procyclicality: Mitigating Regulatory and Accounting Policy Differences through Regulatory Structure Reforms and Enforced Self Regulation” illustrates how the implementation of accounting standards and policies, in certain instances, have contrasted with Basel Committee initiatives aimed at mitigating procyclicality and facilitating forward looking provisioning. The paper also highlights how and why differences between regulatory and accounting policies could (and should) be mitigated. This paper focuses on how recent regulatory reforms – with particular reference to the Dodd Frank Act, impact fair value measurements. Other potential implications for accounting measurements and valuation, will also be considered. Given the tendencies for discrepancies to arise between regulatory and accounting policies, and owing to discrepancies between Basel III and the Dodd Frank Act, would a more imposing and commanding role for international standards not serve as a powerful weapon in harmonizing Basel III and Dodd Frank – whilst mitigating regulatory and accounting policy differences? |
| Keywords: | financial stability; OTC derivatives markets; counterparty risks; disclosure; information asymmetry; transparency; living wills; Volcker Rule; Basel III; Basel II; pro cyclicality; international auditing standards; Dodd Frank Act; fair values |
| JEL: | E02 D0 K2 D8 G01 E3 |
| Date: | 2012–01–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:36149&r=reg |
| By: | Nikogosian, Vigen; Veith, Tobias |
| Abstract: | The literature on vertical integration in markets with regulated upstream prices suggests that the integrated upstream firm might engage in non-price discrimination. Several studies provide policy recommendations derived either from case study approaches or based on theoretical modeling which addresses the unbundling issue. In this study we analyze the impact of vertical integration of retail incumbent and network operator on retail prices and upstream charges. As the vertical structure is heterogeneous across the 850 German electricity submarkets for residential customers (there exist legally unbundled, vertically integrated or fully separated firms), we use firm level data to analyze the effects of different vertical structures and regulation schemes on retail electricity prices. We find significantly higher prices in markets with vertically integrated firms compared to markets with fully separated firms. This finding could indicate non-price discrimination. Furthermore, we find no evidence that legal unbundling eliminates the incentives for non-price discrimination because the prices do not differ from prices in markets under vertical integration. -- |
| Keywords: | electricity,regulation,vertical integration,legal and total unbundling,non-price discrimination |
| JEL: | L1 L5 L9 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:11069&r=reg |
| By: | Shekhar Aiyar; Charles W. Calomiris; Tomasz Wieladek |
| Abstract: | The regulation of bank capital as a means of smoothing the credit cycle is a central element of forthcoming macro-prudential regimes internationally. For such regulation to be effective in controlling the aggregate supply of credit it must be the case that: (i) changes in capital requirements affect loan supply by regulated banks, and (ii) unregulated substitute sources of credit are unable to offset changes in credit supply by affected banks. This paper examines micro evidence—lacking to date—on both questions, using a unique dataset. In the UK, regulators have imposed time-varying, bank-specific minimum capital requirements since Basel I. It is found that regulated banks (UK-owned banks and resident foreign subsidiaries) reduce lending in response to tighter capital requirements. But unregulated banks (resident foreign branches) increase lending in response to tighter capital requirements on a relevant reference group of regulated banks. This “leakage” is substantial, amounting to about one-third of the initial impulse from the regulatory change. |
| JEL: | E32 E51 F30 G21 G28 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17822&r=reg |
| By: | Bouckaert, J.M.C.; Degryse, H.A.; Dijk, T. van (Tilburg University, Center for Economic Research) |
| Abstract: | Abstract: We study the competitive and welfare consequences when only one firm must commit to uniform pricing while the competitor’s pricing policy is left unconstrained. The asymmetric no-discrimination constraint prohibits both behaviour-based price discrimination within the competitive segment and third-degree price discrimination across the monopolistic and competitive segments. We find that an asymmetric no-discrimination constraint only leads to higher profits for the unconstrained firm if the monopolistic segment is large enough. Therefore, a regulatory policy objective of encouraging entry is not served by an asymmetric no-discrimination constraint if the monopolistic segment is small. Only when the monopolistic segment is small and rivalry exists in the competitive segment does the asymmetric no-discrimination constraint enhance welfare. |
| Keywords: | Dominant firms;price discrimination;competition policy;regulation. |
| JEL: | D11 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2012009&r=reg |
| By: | Blackman, Allen (Resources for the Future); Uribe, Eduardo; van Hoof, Bart; Lyon, Thomas P. |
| Abstract: | According to proponents, voluntary agreements (VAs) negotiated with polluters sidestep weak institutions and other barriers to conventional environmental regulation in developing countries. Yet little is known about their effectiveness. We examine VAs in Colombia, a global leader in the use of these policies. We find that the main motive for using VAs has been to build capacity needed for broader environmental regulatory reform. Their additional effect on environmental performance has been questionable. These findings suggest that in developing countries, VAs may be best suited to capacity building, not environmental management per se. |
| Keywords: | voluntary environmental agreement, pollution, Colombia |
| JEL: | Q01 Q56 Q58 |
| Date: | 2012–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-12-06&r=reg |
| By: | Gabriel Chan; Robert Stavins; Robert Stowe; Richard Sweeney |
| Abstract: | The introduction of the U.S. SO2 allowance-trading program to address the threat of acid rain as part of the Clean Air Act Amendments of 1990 is a landmark event in the history of environmental regulation. The program was a great success by almost all measures. This paper, which draws upon a research workshop and a policy roundtable held at Harvard in May 2011, investigates critically the design, enactment, implementation, performance, and implications of this path-breaking application of economic thinking to environmental regulation. Ironically, cap and trade seems especially well suited to addressing the problem of climate change, in that emitted greenhouse gases are evenly distributed throughout the world’s atmosphere. Recent hostility toward cap and trade in debates about U.S. climate legislation may reflect the broader political environment of the climate debate more than the substantive merits of market-based regulation. |
| JEL: | Q52 Q53 Q55 Q58 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17845&r=reg |
| By: | Kjetil Telle (Statistics Norway) |
| Abstract: | Relying on a small natural field experiment with random assignment of treatments, I estimate effects of three core elements of most monitoring and enforcement practices: self-reporting, audit frequency and specific deterrence. I find evidence of evasive reporting of violations in self-audits, as more violations are detected in on-site audits than in self-audits. Announcing the increased audit frequency has no effect on compliance, but an audit raises the firm’s subsequent compliance substantially. |
| Keywords: | environmental regulation; enforcement; EPA; natural field experiment; random assignment |
| JEL: | K42 C93 Q58 D21 H41 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:680&r=reg |
| By: | Halvor Briseid Storrøsten (Statistics Norway) |
| Abstract: | This paper shows that tradable emissions permits and an emissions tax affect the firms' technology choice differently under uncertainty. A tax encourages the most flexible technology if and only if stochastic costs and the equilibrium permit price have sufficiently strong positive covariance, compared with the variance in consumer demand for the good produced. Moreover, the firms' technology choices are socially optimal under tradable emissions permits, but not under an emissions tax. Hence, modeling endogenous technology choice provides an argument in favor of tradable emissions permits as compared with emissions taxes. |
| Keywords: | Regulation; Technology choice; Welfare; Uncertainty; Investment. |
| JEL: | H23 Q55 Q58 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:677&r=reg |
| By: | Joanna Gray |
| Abstract: | The global financial crisis challenges scholars from across many different disciplines to think about causes, immediate consequences and long term responses from the perspective of their particular disciplinary standpoint. This paper focuses on one particular response to the landscape and architecture of financial regulation that results from the lessons about the need to better recognise and counter risk to the financial system as a whole as opposed to its constituent parts and participants. One important policy response to the challenges posed by systemic risk has been the construction of the emergent macroprudential regulatory agenda that is now beginning to take root in practical forms and institutional architecture within the global, European and national spaces within which norms, standards and laws operate. It is argued here that this emerging agenda will challenge lawyers and legal systems more than may be being currently imagined. |
| Date: | 2011–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:erp:euirsc:p0296&r=reg |
| By: | Ojo, Marianne |
| Abstract: | Having considered a vital means whereby the Basel III framework and the Dodd Frank Act could achieve a respectable degree of harmonization, in the paper which precedes this, namely, the paper on “Harmonising Basel III and the Dodd Frank Act through International Accounting Standards – Reasons why International Accounting Standards Should Serve as “Thermostats”, this paper considers another important means of effectively achieving the aims and objectives of these important and major regulatory reforms aimed at achieving greater financial stability. In so doing, it will highlight challenges encountered by the Basel III framework, as well as that encountered by the Dodd Frank Act – particularly in the areas of enforcement, coordination and communication. In facilitating better enforcement, the need for high level principles, bright line rules and a more effective mandate will be emphasized. Furthermore, a system whereby greater collaboration between standard setters and national supervisors can be better facilitated requires effective coordination and communication mechanisms aimed at ensuring that vital decisions and information are communicated timely, accurately, effectively and completely. |
| Keywords: | financial stability; Volcker Rule; Basel III; Dodd Frank; European Systemic Risk Board; supervisors; Basel Committee; coordination; information asymmetry; regulation; high level principles |
| JEL: | D0 E02 K2 D8 G01 |
| Date: | 2012–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:36164&r=reg |
| By: | Francesco Vona (Observatoire Français des Conjonctures Économiques); Francesco Nicolli (University of Ferrara); Lionel Nesta (Observatoire Français des Conjonctures Économiques) |
| Abstract: | This paper carries out a comprehensive analysis of renewable energy innovations considering four mechanisms suggested by innovation models: 1. policy-inducement; 2. market structure; 3. demand and social cohesion- mainly proxied by income inequality; 4. characteristics of country knowledge base. For OECD countries and years 1970-2005, we build a unique dataset containing time-varying information on quality-adjusted patent production in renewable energy, the latter being a function of environmental policies, green R&D, entry barriers, knowledge stock, knowledge diversity and income inequality. We develop count data models using the Generalized Method of Moments (GMM) to account for endogeneity of policy support. Our synthetic policy index positively affects innovations especially in countries with deregulated energy markets and low entry barriers. The effect of entry barriers and inequality is negative and of similar magnitude as that of policy. Product market liberalization positively affects green patent generation, especially so when ambitious policies are adopted, when the initial level of public R&D expenditures and when the initial share of distributed energy generation is high. Our results are robust to alternative specifications, to the inclusion of technology-specific effects and to the use of quality-adjusted patents as dependent variables. In the latter case, the estimated effect of lowering entry barriers and of knowledge diversity almost double on citation count relatively to patent count. |
| Keywords: | renewable energy technology, patent, environmental policies, product market regulation, inequality |
| JEL: | Q55 Q58 Q42 Q48 O34 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:1205&r=reg |
| By: | François Facchini (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne); Mickaël Melki (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne) |
| Abstract: | This paper examines the influence of political ideology on economic growth in the French democracy since 1871. It does so by addressing three main issues : the property and the reliability of a political ideology index in the long-run, the robustness of the relationship between ideology and growth and the specific channels through which political ideology affects economic performance. The main conclusion is that, compared with right-wing parties in power, left-wing governments have promoted equity at the expense of economic growth. It also appears that the main channel through which political ideology has impacted economic performance all along the French democratic experience is the budgetary tool (i.e. fiscal and redistributive policies) which influenced employment and income inequalities. By contrast, there seems to be less or even no empirical support for explanations based on the monetary policy or regulation, such as trade policies or the labor market regulation. |
| Keywords: | French economic history, 19th century, 20th century, political ideology, partisanship, growth, government performance, fiscal policy, public spending, unemployment, inequality. |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00662838&r=reg |