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on Regulation |
| By: | Kitzmuller, Markus |
| Abstract: | This paper develops a simple model to analyze the interaction between strategic corporate public good provision, international firm location and national regulation. An information-based strategic corporate public good provision mechanism is proposed to shed light on recent firm behavior within different regulatory environments. The main insight derived is that in the presence of firms with geographic flexibility (multinational enterprises) and market provision of an international public credence good, unilateral (non-cooperative) regulatory scope depends on (1) the absolute probabilities to verify firms'corporate public good provision levels within different geographic and institutional environments, and (2) the differential between these probabilities across countries. The relative information asymmetry determines not only the market levels of the public good produced under autarky, but also the relocation incentives of multinational enterprises. A firm trades off lower production costs, which increase its competitiveness in pricing, with higher expected informational price premiums, which decrease its competitiveness. A government's ability to regulate above market (corporate public good provision) levels decreases with the absolute level of foreign transparency, while it increases in the relative (positive) difference between the same transparency at home and abroad. This may not only explain mixed empirical evidence of theoretic propositions such as the Pollution Haven Hypothesis and Regulatory Race to the Bottom dynamics, but also open up interesting policy implications as the international information playing field becomes leveled through development, while existing regulations are rather rigid, and policy coordination remains limited. |
| Keywords: | Environmental Economics&Policies,Economic Theory&Research,Labor Policies,Debt Markets,Markets and Market Access |
| Date: | 2012–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6251&r=reg |
| By: | Hoernig, Steffen |
| Abstract: | We show that the prediction of a strategic connectivity breakdown under a receiving-party-pays (RPP) system and discrimination between on- and off-net prices does not hold up once more than two networks are considered. Indeed, equilibria with finite call and receiving prices exist for a large and realistic range of call externality values. This allows regulation of termination rates to achieve the socially optimal retail pricing structure under RPP. |
| Keywords: | Connectivity breakdown; Mobile network competition; Receiving party pays; Termination rates |
| JEL: | L13 L51 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9189&r=reg |
| By: | Rob Aalbers; Victoria Shestalova; Viktoria Kocsis |
| Abstract: | <p>This paper discusses policy instruments for redirecting technical change within the electricity sector to mitigate climate change.</p><p>First, we unravel the mechanism behind directed technical change, explaining why markets may underprovide innovations in expensive renewable technologies in comparison to innovations in energy-efficient fossil-fuel generators. Subsequently, we characterize technical change in electricity generation technologies, stressing the heterogeneity of knowledge spillovers both within and between clean electricity generation technologies. We argue that there exists a rationale for a portfolio approach to innovation in the electricity sector, i.e., optimal innovation policies are neither fully generic nor fully specific; and they need to be adapted, in response to new information learned by the government. The existing innovation literature does not, however, provide a clear-cut answer for designing such a policy. We compare policy instruments and argue that public R&D support to clean technologies, either in the form of subsidies or prizes, seems to be the prime candidate for implementing non-generic innovation policy.</p> |
| JEL: | Q48 Q55 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:223&r=reg |
| By: | Luciano Fanti |
| Abstract: | In this paper the dynamical effects of public environmental policies are investigated in a Cournot duopoly with heterogeneous expectations in a context of limited rationality. It is shown that the introduction of upper limits to emissions always tends to destabilise and generate a chaotic market dynamics. By contrast the role played by the cost of the abatement technology is more complicated: although in most cases higher costs imply a higher likelihood of stability loss, in some cases increases of such costs when their level is sufficiently low tends to stabilise and in such cases if the market is stable either a decrease or an increase of such costs may lead to a stability loss. The policy implications of these results suggest caution in the use of environmental policies from a market stability point of view. |
| Keywords: | Environmental policies; Bifurcation; Chaos; Cournot; Oligopoly; |
| JEL: | Q52 C62 D43 L13 |
| Date: | 2012–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:pie:dsedps:2012/154&r=reg |
| By: | Hunt Allcott; Todd Rogers |
| Abstract: | Interventions to affect repeated behaviors, such as smoking, exercise, or workplace effort, can often have large short-run impacts but uncertain or disappointing long-run effects. We study one part of a large program designed to induce energy conservation, in which home energy reports containing personalized feedback, social comparisons, and energy conservation information are being repeatedly mailed to more than five million households across the United States. We show that treatment group households reduce electricity use within days of receiving each of their initial few reports, but these immediate responses decay rapidly in the months between reports. As more reports are delivered, the average treatment effect grows but the high-frequency pattern of action and backsliding attenuates. When a randomly-selected group of households has reports discontinued after two years, the effects are much more persistent than they had been between the initial reports, implying that households have formed a new "capital stock" of physical capital or consumption habits. We show how assumptions about long-run persistence can be important enough to change program adoption decisions, and we illustrate how program design that accounts for the capital stock formation process can significantly improve cost effectiveness. |
| JEL: | D03 D11 L97 Q41 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18492&r=reg |
| By: | Talaei, A.; Begg, K.; Jamasb, T. |
| Abstract: | The UK government has set the ambitious targets of 20 and 50% reduction in greenhouse gas emissions by 2020 and 2050 respectively. The transport sector accounts for 21% of total CO2 emissions in the UK and can, therefore, be important for achieving the emissions reduction targets. Within the transport sector, electric vehicles (EV) are considered as one of the important mitigation options. However the effect of EVs on emissions and the electricity sector is subject to debate. We use scenario analysis to investigate the emission reduction potential of EVs and their interaction with electricity sector. We show that managing the charging patterns could reduce adverse effects of EVs on the electricity sector while the number of EVs remains the factor affecting the mitigation potential. Our findings indicate that in the UK, by 2030, EVs could result in up to 32% emissions reduction compared to advanced internal combustion engines. We also found that the need for new electricity generation and distribution capacity to meet the conventional electricity demand and demand from EVs could be reduced by up to 12% from 70.6 to 61.8 GW if the EV’s electricity demand is managed. |
| Keywords: | Electric Vehicles, CO2 Emissions, Electricity Demand Management |
| Date: | 2012–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1246&r=reg |
| By: | Giuseppe Carone; Christoph Schwierz; Ana Xavier |
| Abstract: | This paper presents and evaluates pharmaceutical policies in the EU aimed at the rational use of medicines and at keeping pharmaceutical spending under control. Policy makers are growing more aware that by regulating pharmaceutical markets correctly, considerable savings can be achieved without compromising the quality of care. Specifically, the paper makes the case that, by following numerous best-practices in pharmaceutical sector regulations, the value for money of pharmaceutical consumption could be substantially increased. Appropriate regulations can be relevant for pricing, reimbursement, market entry and expenditure control, as well as specific policies targeted at the distribution chain, physicians and patients. Drawing on various initiatives at the EU level related to the pharmaceutical sector, the paper also explores policy options for the EU. |
| JEL: | I11 I18 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecopap:0461&r=reg |
| By: | Richard Schmalensee (Howard W. Johnson Professor of Economics and Management, Emeritus at the Massachusetts Institute of Technology, and a Research Associate of the National Bureau of Economic Research); Robert N. Stavins (Albert Pratt Professor of Business and Government at the Harvard Kennedy School, a University Fellow of Resources for the Future, and a Research Associate of the National Bureau of Economic Research) |
| Abstract: | Two decades have passed since the Clean Air Act Amendments of 1990 launched a grand experiment in market-based environmental policy: the SO2 cap-and-trade system. That system performed well but created four striking ironies. First, by creating this system to reduce SO2 emissions to curb acid rain, the government did the right thing for the wrong reason. Second, a substantial source of this system’s cost-effectiveness was an unanticipated consequence of earlier railroad deregulation. Third, it is ironic that cap-and-trade has come to be demonized by conservative politicians in recent years, since this market-based, cost-effective policy innovation was initially championed and implemented by Republican administrations. Fourth, court decisions and subsequent regulatory responses have led to the collapse of the SO2 market, demonstrating that what the government gives, the government can take away. |
| Keywords: | Market-based Instruments, Cap-and-trade, Clean Air Act Amendments of 1990, Sulfur Dioxide, Acid Rain |
| JEL: | Q54 Q58 Q40 Q48 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2012.60&r=reg |
| By: | Greve,T.; Pollitt, M. G. |
| Abstract: | The UK has ambitious plans for exploiting offshore wind for electricity production in order to meet its challenging target under the EU Renewable Energy Directive. This could involve investing up to £20bn in transmission assets to bring electricity ashore. An investment of this magnitude calls for an efficient mechanism to determine which projects get financed and ensuring that only those projects that are selected can be delivered at least costs to consumers. The electricity regulator’s ongoing tender auctions are likely to work well for point-to-point transmission and for networks already built. However, it is still unclear what kinds of models could be considered for complex meshed offshore (and onshore) networks where licences are granted not only to own and operate, but also to build a transmission network. This paper provides an extensive survey on the current theory and experience of auctions. The main objective is to discuss the design of auctions for transmission assets in which bidding for packages of transmission assets is a possibility. |
| Keywords: | Energy Transmission; Auction Design; Combinatorial Auctions; Package Bidding |
| JEL: | D44 L94 |
| Date: | 2012–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1245&r=reg |
| By: | Mark J. Holmes (Department of Economics, Waikato University Management School); Jesus Otero (Facultad de Economia, Universidad del Rosario); Theodore Panagiotidis (Department of Economics, University of Macedonia) |
| Abstract: | This paper employs a pair-wise approach to examine regional integration in the US gasoline market. Using gasoline price data at the state level over a period of more than two decades, we find strong support for the view that the law of one price holds in regional markets, as more than 80% of bivariate price differentials turn out to be stationary. Furthermore, we uncover evidence that the speed at which prices converge to the long-run equilibrium depends upon the distance between states. Asymmetries are also present in this relationship. Our findings suggest that the more similar are states with respect to taxation, gas stations and refining capacity, the faster is the speed of adjustment towards the long-run equilibrium.. |
| Keywords: | Panel data, pair-wise approach, market integration, gasoline, speed of adjustment. |
| JEL: | C33 Q47 R11 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:mcd:mcddps:2012_10&r=reg |