nep-reg New Economics Papers
on Regulation
Issue of 2012‒12‒22
eleven papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Emissions trading with offset markets and free quota allocations By Knut Einar Rosendahl and Jon Strand
  2. Optimal Access Regulation with Downstream Competition By Flavio Menezes; John Quiggin; Tina Kao
  3. On the Optimal Number of Firms in the Commons: Cournot vs Bertrand By D. Dragone; L. Lambertini; A. Palestini; A. Tampieri
  4. Which compensation for whom ?. By Pascal Gastineau; Emmanuelle Taugourdeau
  5. Effects of feedback on residential electricity demand: Findings from a field trial in Austria By Schleich, Joachim; Klobasa, Marian; Götz, Sebastian; Brunner, Marc
  6. Supervision in Firms. By Kouroche Vafaï
  7. Legalizing Bribe Giving By Dufwenberg, Martin; Spagnolo, Giancarlo
  8. Information in Hierarchies. By Kouroche Vafaï
  9. On the optimal timing of switching from non-renewable to renewable resources: dirty vs clean energy sources and the relative efficiency of generators By E. Agliardi; L. Sereno
  10. Optimal Timing of Carbon Capture Policies Under Alternative CCS Cost Functions By Amigues, Jean-Pierre; Lafforgue, Gilles; Moreaux, Michel
  11. Price Dispersion, Search Costs and Spatial Competition: Evidence from the Austrian Retail Gasoline Market By Bernd Jost

  1. By: Knut Einar Rosendahl and Jon Strand (Statistics Norway)
    Abstract: We study interactions between a “policy bloc’s” emissions quota market and an offset market where emissions offsets can be purchased from a non-policy “fringe” of countries (such as for the CDM under the Kyoto Protocol). Policy-bloc firms are assumed to benefit from free quota allocations that are updated according to either past emissions or past outputs. We show that both overall abatement, and the allocation of given abatement between the policy bloc and the fringe, tend to be inefficient. When the policy-bloc quota market and offset markets are fully integrated (and firms buy offsets directly from the fringe), and all quotas and offsets must be traded at a single price, it is optimal for the policy bloc to either not constrain the offset market whatsoever, or to ban offsets completely. The former (latter) case occurs when free allocation of quotas is not too generous (very generous), and the offset market can profitably deliver large (only a small) quota amounts. Governments of policy countries would however instead prefer to buy offsets directly from the fringe at a price below the policy-bloc quota price. The offset price will then be below the marginal damage cost of emissions, and the quota price in the policy bloc above marginal damage cost. This solution is also inefficient as the policy bloc (acting as a monopsonist) purchases too few offsets from the fringe.
    Keywords: Emissions quotas; Offset market; Quota allocation
    JEL: H23 Q54 Q58
    Date: 2012–12
  2. By: Flavio Menezes (School of Economics, The University of Queensland); John Quiggin (School of Economics, The University of Queensland); Tina Kao
    Abstract: We analyze the setting of access prices for a bottleneck facility where the facility owner also competes in the deregulated downstream market. We consider a continuum of market structures from Cournot to Bertrand. These market structures are fully characterized by a single parameter representing the intensity of competition. We first show how the efficient component pricing rule (ECPR) should be modified as the downstream competitive intensity changes. We then analyse the optimal access price where a regulator trades off production efficiency and pro-competitive effects to maximize total surplus.
    Date: 2012–12–03
  3. By: D. Dragone; L. Lambertini; A. Palestini; A. Tampieri
    Abstract: We revisit the debate on the optimal number of firms in the commons in a differential oligopoly game in which firms are either quantity- or price-setting agents. Production exploits a natural resource and involves a negative externality. We calculate the number of firms maximising industry profits, finding that it is larger in the Cournot case. While industry structure is always inefficient under Bertrand behaviour, it may or may not be so under Cournot behaviour, depending on parameter values. The comparison of private industry optima reveals that the Cournot steady state welfare level exceeds the corresponding Bertrand magnitude if the weight of the stock of pollution is large enough.
    JEL: C73 L13 Q20 Q51
    Date: 2012–12
  4. By: Pascal Gastineau (IFSTTAR); Emmanuelle Taugourdeau (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: This paper examines a situation where a decision-maker determines the appropriate compensation that should be implemented for a given ecological damage. The compensation can be either or both in monetary and environmental units to meet three goals : i) no aggregate welfare loss, ii) minimization of the cost associated with the compensation, iii) minimal environmental compensation requirement. The findings suggest that - in some cases - providing both monetary and environmental compensation can be the best option. We also emphasize the impact of implementing a minimal environmental compensation constraint especially in terms of equity and cost efficiency.
    Keywords: Environmental damage, compensation, welfare, inequity.
    JEL: H43 Q51 Q57
    Date: 2012–11
  5. By: Schleich, Joachim; Klobasa, Marian; Götz, Sebastian; Brunner, Marc
    Abstract: This paper analyzes the effects of providing feedback on electricity consumption in a field trial involving more than 1,500 households in Linz, Austria. About half of these households received feedback together with information about electricity-saving measures (pilot group), while the remaining households served as a control group. Participation in the pilot group was random, but households were able to choose between two types of feedback: access to a web portal or written feedback by post. Results from cross section OLS regression suggest that feedback provided to the pilot group corresponds with electricity savings of around 4.5 % for the average household. Our results from quantile regressions imply that for house-holds in the 30th to the 70th percentile, feedback on electricity consumption is statistically significant and effects are highest in absolute terms and as a share of electricity consumption. For percentiles below or above this range, feedback ap-pears to have no effect. Finally, controlling for a potential endogeneity bias induced by non random participation in the feedback type groups, we find no difference in the effects of feedback provided via the web portal and by post. --
    Keywords: smart metering,feedback,household electricity consumption
    Date: 2012
  6. By: Kouroche Vafaï (Université Paris Descartes - Sorbonne Cité et Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: To control, evaluate, and motivate their agents, firms employ supervisors. As shown by empirical investigations, biased evaluation by supervisors linked to collusion is a persistent feature of firms. This paper studies how deceptive supervision affects agency relationships. We consider a three-level firm where a supervisor is in charge of producing a verifiable report on an agent's output. Depending on the output he has observed, the supervisor may either collude with the agent or with the principal, and make an uniformative report. We show that the proliferation of collusive activities in firms : modifies the configuration of the optimal preventive policy, may increase the expected cost of preventing each type collusion, is beneficial to the supervisor and detrimental to the agent, and is not always harmful.
    Keywords: Firm, group decision, control, biased supervision.
    JEL: D20 D73 L20 M50
    Date: 2012–12
  7. By: Dufwenberg, Martin; Spagnolo, Giancarlo
    Abstract: A model of harassment bribes (paid for services one is entitled to) is developed and used to analyze the recent proposal to legalize paying bribes while increasing fines on accepting bribes. We explore performance as regards corruption deterrence and public service provision. A modified scheme, where immunity is conditional on reporting, addresses some key objections. We highlight complementarities with other policies aimed at improving accountability and performance of law enforcement agencies, and discuss the relevance for fighting other forms of corruption.
    Keywords: bribes; corruption; immunity; law enforcement; leniency; whistleblowers
    JEL: D73 K42 O17
    Date: 2012–11
  8. By: Kouroche Vafaï (Université Paris Descartes - Sorbonne Cité et Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: We determine the optimal policy to cope with information concealment in a hierarchy where a principal relies on a supervisor to obtain verifiable information about an agent's output. Depending on the information he has obtained, the informed supervisor may either collude with the agent or with the principal and conceal information. The principal has the choice of four policies to cope with information concealment : it can prevent both types of information concealment, allow both of them, or prevent one of them and allow the other one. We characterize the incentive contracts in this environment and show that it is not optimal to allow information concealment, that is, the optimal policy of a hierarchy exposed to multiple types of information concealment is to prevent them all.
    Keywords: Hierarchy, information concealment.
    JEL: D20 D73 L20 M50
    Date: 2012–12
  9. By: E. Agliardi; L. Sereno
    Abstract: We develop a model on the optimal timing of switching from non-renewable to renewable energy sources with endogenous extraction choices under emission taxes and abatement costs. We assume that non-renewable resources are "dirty" inputs and create environmental degradation, while renewable resources are more environmentally friendly, although they may be more or less productive than the exhaustible resources. The value of the switching option from non-renewable to renewable resources is characterized. Numerical applications show that an increase in emission taxes, abatement costs or demand elasticity slows down the adoption of substitutable renewable resources, while an increase in the natural rate of resource regeneration, the stock of renewable resources or the relative productivity parameter speeds up the investment in the green technology.
    JEL: D81 H23 Q28 Q38 Q40 Q50
    Date: 2012–11
  10. By: Amigues, Jean-Pierre; Lafforgue, Gilles; Moreaux, Michel
    Abstract: We determine the optimal exploitation time-paths of three types of perfect substitute energy resources: The first one is depletable and carbon-emitting (dirty coal), the second one is also depletable but carbon-free thanks to a carbon capture and storage (CCS) process (clean coal) and the last one is renewable and clean (solar energy). We assume that the atmospheric carbon stock cannot exceed some given ceiling. These optimal paths are considered along with alternative structures of the CCS cost function depending on whether the marginal sequestration cost depends on the flow of clean coal consumption or on its cumulated stock. In the later case, the marginal cost function can be either increasing in the stock thus revealing a scarcity effect on the storage capacity of carbon emissions, or decreasing in order to take into account some learning process. We show among others the following results: Under a stockdependent CCS cost function, the clean coal exploitation must begin at the earliest when the carbon cap is reached while it must begin before under a flow-dependent cost function. Under stock-dependent cost function with a dominant learning effect, the energy price path can evolve non-monotonically over time. When the solar cost is low enough, this last case can give rise to an unusual sequence of energy consumption along which the solar energy consumption is interrupted for some time and replaced by the clean coal exploitation. Last, the scarcity effect implies a carbon tax trajectory which is also unusual in this kind of ceiling models, its increasing part been extended for some time during the period at the ceiling.
    Keywords: Carbon capture and storage; Energy substitution; Learning effect; Scarcity effect; Carbon stabilization cap.
    JEL: Q32 Q42 Q54 Q55 Q58
    Date: 2012–04
  11. By: Bernd Jost
    Date: 2012–09–26

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