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on Regulation |
| By: | Steven Shavell |
| Abstract: | Regulation and the negligence rule are both designed to obtain compliance with desired standards of behavior, but they differ in a primary respect: compliance with regulation is ordinarily assessed independently of the occurrence of harm, whereas compliance with the negligence rule is evaluated only if harm occurs. It is shown in a stylized model that because the use of the negligence rule is triggered by harm, the rule enjoys an intrinsic enforcement cost advantage over regulation. Moreover, this advantage suggests that the examination of behavior under the negligence rule should tend to be more detailed than under regulation (as it is). |
| JEL: | K13 K20 L5 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18418&r=reg |
| By: | Raffaele Fiocco; Roland Strausz; ; |
| Abstract: | Strategic delegation to an independent regulator with a pure consumer standard improves dynamic regulation by mitigating ratchet effects associated with short term contracting. A consumer standard alleviates the regulator’s myopic temptation to raise output after learning the firm is inefficient. Anticipating this tougher regulatory behavior, efficient firms find cost exaggeration less attractive. This reduces the need for long term rents and mitigates ratchet effects. The regulator’s welfare standard biased towards consumers comes, however, at the cost of some allocative distortion from the genuine social welfare perspective. Hence, a trade-off results which favors strategic delegation when efficient firms are relatively likely. |
| Keywords: | Dynamic regulation, strategic delegation, consumer standard, ratchet effect, limited commitment. |
| JEL: | D82 L51 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2012-055&r=reg |
| By: | Cristina Barbot; Ofelia Betancor; M. Pilar Socorro; M. Fernanda Viecens |
| Abstract: | Emission trading systems (ETS) are being applied worldwide and in different economic sectors as an environmental regulatory tool that induces reductions of CO2 emissions. In Europe such a system is in place since 2005 for energy intensive installations and, since 1st January 2012, for airlines with flights arriving and departing from Community airports. The efficiency of the system should consider not only how it allows reaching an environmental goal, but also it should take into account its implications for market competition. In this work we develop a theoretical model that analyses the European ETS’s main features as devised for airlines, focusing on its effects on potential competition and entry deterrence. Contrary to other economic activities under ETS, potential competition is usual in most airline markets. Our results indicate that the share of capped allowances allocated initially for free to air operators may be a key element in deterring or allowing entry into the market. This result may be in collision with the general European principle of promoting competition and may represent a step backwards in the construction of a single European air transport market. |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaddt:2012-05&r=reg |
| By: | Randy A. Becker; Ronald J. Shadbegian; Carl Pasurka |
| Abstract: | It remains an open question whether the impact of environmental regulations differs by the size of the business. Such differences might be expected because of statutory, enforcement, and/or compliance asymmetries. Here, we consider the net effect of these three asymmetries, by estimating the relationship between plant size and pollution abatement expenditures, using establishment-level data on U.S. manufacturers from the Census Bureau’s Pollution Abatement Costs and Expenditures (PACE) surveys of 1974-1982, 1984-1986, 1988-1994, 1999, and 2005, combined with data from the Annual Survey of Manufactures and Census of Manufactures. We model establishments’ PAOC intensity – that is, their pollution abatement operating costs per unit of economic activity – as a function of establishment size, industry, and year. Our results show that PAOC intensity increases with establishment size. We also find that larger firms spend more per unit of output than do smaller firms. |
| Keywords: | Environmental Regulation, costs, Business size, U. S.manufactoring |
| JEL: | L51 L60 Q52 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:nev:wpaper:wp201206&r=reg |
| By: | Klinge Jacobsen, Henrik; Hansen, Lise-Lotte P; Schröder, Sascha T; Kitzing, Lena |
| Abstract: | There are considerable benefits from cooperating among member states on meeting the 2020 RES targets. Today countries are supporting investments in renewable energy by many different types of support schemes and with different levels of support. The EU has opened for cooperation mechanisms such as joint support schemes for promoting renewable energy to meet the 2020 targets. The potential coordination benefits, with more efficient localisation and composition of renewable investment, can be achieved by creating new areas/sub-segments of renewable technologies where support costs are shared and credits are transferred between countries. Countries that are not coordinating support for renewable energy might induce inefficient investment in new capacity that would have been more beneficial elsewhere and still have provided the same contribution to meeting the 2020 RES targets. Furthermore, countries might find themselves competing for investment in a market with limited capital available. In both cases, the cost-efficiency of the renewable support policies is reduced compared to a coordinated solution. Barriers for joint support such as network regulation regarding connection of new capacity to the electricity grid and cost sharing rules for electricity transmission expansion are examined and solutions are suggested. The influence of additional renewable capacity on domestic/regional power market prices can be a barrier. The market will be influenced by for example an expansion of the wind capacity resulting in lower prices, which will affect existing conventional producers. This development will be opposed by conventional producers whereas consumers will support such a strategy. A major barrier is the timing of RES targets and the uncertainty regarding future targets. We illustrate the importance of different assumptions on future targets and the implied value of RES credits. The effect on the credit price for 2020 is presented in an exemplary case study of 200MW wind capacity. |
| Keywords: | RES target; cooperation mechanisms; policy coordination; renewables; European energy policy |
| JEL: | Q48 Q01 Q20 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:41400&r=reg |
| By: | Ellerman Denny; Delarue Erik; Hannes Weigt (University of Basel) |
| Abstract: | <p style="text-indent:0cm"><span lang="EN-GB">The overlapping impact of the Emission Trading System (ETS) and renewable energy (RE) deployment targets creates a classic case of interaction effects. Whereas the price interaction is widely recognized and has been thoroughly discussed, the effect of an overlapping instrument on the abatement attributable to an instrument has gained little attention. </span><span style="line-height:150%" lang="EN-GB">This paper estimates the actual reduction in demand for European Union Allowances that has occurred due to RE deployment focusing on the German electricity sector, for the five years 2006 through 2010. </span><span lang="EN-US">Based on a unit commitment model we estimate that CO2 emissions from the electricity sector are reduced by 33 to 57 Mtons, or 10% to 16% of what estimated emissions would have been without any RE policy. Furthermore,</span><span style="line-height:150%" lang="EN-US"> </span><span style="line-height:150%" lang="EN-GB">we find that the abatement attributable to RE injections is greater in the presence of an allowance price than otherwise. The same holds for the ETS effect in presence of RE injection. T</span><span lang="EN-US">his interaction effect is consistently positive for the German electricity system, at least for these years, and on the order of 0.5% to 1.5% of emissions.</span></p> |
| Keywords: | ETS, RE policy, interaction, emission abatement, Germany |
| JEL: | L94 Q58 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:2012/14&r=reg |
| By: | Michele Cincera; Antonio Estache; Lauriane Dewulf |
| Abstract: | This paper presents an updated empirical assessment of the relative effectiveness of intra-platform and inter-platform competition in terms of broadband diffusion in Europe between 2003 and 2010. It relies on an econometric analysis of 18 European countries. To approximate two forms of competition within a same platform, we distinguish between service-based access and facility-based access. The first type requires less investment from entrants than the second which allows entrants to differentiate their product. Our results update and validate earlier studies. We show that service-based intra-platform competition brought by access regulation is still not an accelerating factor of broadband diffusion (or investment) in Europe. In contrast, we find that both facility-based intra-platform competition brought by access regulation and inter-platform competition brought by the deployment of non-DSL technologies effectively fuels broadband diffusion. In sum, many EU countries may have underestimated the potential payoff of stimulating product differentiation through inter-platform and service-based intra-platform competition for the diffusion of broadband in Europe. |
| Keywords: | ICT; broadband diffusion; competition |
| JEL: | D43 L43 L63 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/128909&r=reg |
| By: | Ginés de Rus; M. Pilar Socorro |
| Abstract: | In this paper we analyze the consequences of access pricing on infrastructure investment and intermodal competition. First, we analyze the optimal access prices to be charged to private operators. We find that the optimal access price to be charged for the use of a particular infrastructure depends on the existence of intermodal substitution or complementarity with other transport modes and infrastructures. Second, we analyze under which circumstances the investment in rail infrastructure is socially desirable both in a context with and without budget constraints. The positive net present value of the investment is not a sufficient condition. The necessary and sufficient condition implies a positive difference in social welfare for the cases in which the new infrastructure is and is not constructed. |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaddt:2012-06&r=reg |
| By: | Massimo Filippini (Department of Economics, University of Lugano; ETH, Zurich, Switzerland); Martin Koller (ETH, Zurich, Switzerland) |
| Abstract: | The purpose of this study is to analyze the level of cost efficiency of Swiss Post's postal delivery units to enable policy makers' as well as Swiss Post to decide on the reactions to market changes. In particular, we use different panel data models to assess cost efficiency in these units to account for unobserved heterogeneity. The results from applying Mundlak's formulation to the Pooled stochastic frontier model provides evidence that this model is not affected by a heterogeneity bias and that the cost efficiency values lie within a lower and upper bound of the other recent and standard econometric frontier models. Overall, the analysis shows that assumptions on unobserved heterogeneity are crucial and that results of econometric cost efficiency measurement models have to be interpreted with corresponding caution. |
| Keywords: | cost efficiency, stochastic frontier models, unobserved heterogeneity, Mundlak, postal delivery network |
| JEL: | C33 D24 H42 L87 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:lug:wpaper:1206&r=reg |