nep-reg New Economics Papers
on Regulation
Issue of 2013‒01‒12
twelve papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Regulation, Imperfect Competition, and the U.S. Abortion Market By Andrew Beauchamp
  2. Welfare Analysis of Regulating Mobile Termination Rates in the UK with an Application to the Orange/T-Mobile Merger By David Harbord; Steffen Hoernig
  3. Commodity taxation and regulatory competition By Simone Moriconi; Pierre M. Picard; Skerdilajda Zanaj
  4. Political Economy of Banking Regulation By Buck, Florian; Schliephake, Eva
  5. The Ambivalence of Two-Part Tariffs for Bottleneck Access By Steffen Hoernig; Ingo Vogelsang
  6. State Owned Firms: Private Debt, Cost Revelation and Welfare By Pierre M. Picard; Ridwan D. Rusli
  7. An Electricity Market Model with Generation Capacity Investment under Uncertainty By Schröder, Andreas
  8. Increasing Access to Water Service in Bandung Regency: A Policy Simulation By Ahmad Komarulzaman; Ben Satriatna
  9. On the estimation of marginal cost By Delis, Manthos D; Iosifidi, Maria; Tsionas, Efthymios
  10. Who is responsible for the CO2 emissions that China produces? By Ying Liu; Kankesu Jayanthakumaran; Frank Neri
  11. Welfare effects of patent protection and productive public services: why do developing countries prefer weaker patent protection? By Tatsuro Iwaisako
  12. Entry Regulation and Entrepreneurship By Rostam-Afschar, Davud

  1. By: Andrew Beauchamp (Boston College)
    Abstract: The market for abortion in the U.S. has become increasingly concentrated in recent years and many states have tightened abortion regulations aimed at providers. Using unique data on abortion providers I estimate a dynamic model of entry, exit and service provision which captures the effect of regulation on provider behavior. High fixed costs explain the growth of large clinics and estimates show regulation increased entry costs for small providers. A simulation removing all regulations increases entry by smaller providers into incumbent-markets: competition increases as does the number of abortions. Targeted entry subsidies, however, increase access while only slightly increase abortion.
    Keywords: abortion, regulation
    JEL: J13 L11
    Date: 2012–08–17
  2. By: David Harbord; Steffen Hoernig
    Abstract: We present a calibrated model of the UK mobile telephony market with four mobile networks; calls to and from the fixed network; network-based price discrimination; and call externalities. Our results show that reducing mobile termination rates broadly in line with the recent European Commission Recommendation to either "pure long-run incremental cost"; reciprocal termination charges with fixed networks; or "Bill & Keep" (i.e. zero termination rates), increases social welfare, consumer surplus and networks' profits. Depending on the strength of call externalities, social welfare may increase by as much as £ 990 million to £ 4.5 billion per year, with Bill & Keep leading to the highest increase in welfare. We also apply the model to estimate the welfare effects of the 2010 merger between Orange and T-Mobile under different scenarios concerning MTRs, and predict that consumer surplus decreases strongly.
    Keywords: telecommunications, regulation, mobile termination rates, network effects, welfare, calibration; telecommunications, regulation, mobile termination rates, network effects, welfare, calibration JEL codes: D43, L13, L51, L96
    Date: 2012
  3. By: Simone Moriconi (Catholic University of Milan, ITEMQ and CREA, University of Luxembourg); Pierre M. Picard (CREA, University of Luxembourg); Skerdilajda Zanaj (CREA, University of Luxembourg)
    Abstract: This paper studies competition in regulation and commodity taxation between trading countries. We present a general equilibrium model in which destination based consumption taxes finance public goods, while regulation of entry determines the number of firms in the markets. We find (i) no strategic interaction in commodity taxes; (ii) regulation leads to lower commodity tax rates if demand for public goods is more sensitive to income than demand for private goods and (iii) regulation policy is a strategically complement instrument if consumers do not over value product diversity. In the empirical part of the paper, we test our predictions using panel data for 21 OECD countries over the period 1990-2008.
    Keywords: Regulation, commodity tax, strategic interactions, fiscal federalism
    JEL: F0 H1 H7 H87 L5
    Date: 2012
  4. By: Buck, Florian; Schliephake, Eva
    Abstract: The paper argues that national regulators can improve the stability of the domestic banking sector via two substitutable policy instruments; minimum capital requirements and effort spend on domestic supervision. Both tools increase the soundness of a national banking system, but they imply different cost burdens between domestic banks and taxpayers. The optimal domestic policy choice is characterised by trading off marginal costs and benefits born by each party. However, the optimal policy choice changes if banks are allowed to be mobile. We show that countries are better off by harmonising capital requirements on an international standard la Basel, since harmonisation counters a regulatory race with other jurisdictions and will increase national utility. --
    JEL: G18 L51 D78
    Date: 2012
  5. By: Steffen Hoernig; Ingo Vogelsang
    Abstract: Two-part tariffs, when used at the retail level, increase efficiency by lowering the price of marginal units. The same potential for higher efficiency exists for two-part tariffs at wholesale level for a given market structure, but the fixed part of the wholesale tariff can negatively affect the latter. In a simulated competition model of next-generation telecommunications access networks that has been calibrated with engineering cost data, we show that the latter effects strongly outweigh the former. That is, substituting a cost-based linear wholesale access tariff with revenue-equivalent two-part tariffs reduces the number of access seekers and therefore leads to higher prices and lower welfare and consumer surplus. JEL codes:
    Date: 2012
  6. By: Pierre M. Picard (CREA, University of Luxembourg and CORE, Université Catholique de Louvain); Ridwan D. Rusli (CREA, University of Luxembourg)
    Abstract: In this paper we study the role of private debt financing in disciplining a state owned firm operating for a government that incurs a cost of public financing. We show that debt contracts allow the government to avoid socially costly subsidies by letting unprofitable state- owned firms default. Debt is never used when the firm and government share the same information about the firm. By contrast, when the state-owned firm has private information, the government has an incentive to use debt to reduce the firm's information rents. We identify the conditions under which a positive debt level benefits governments. They depend on the cost of public funds, the interbank funding rate, the share of foreign investors, the level and uncertainty of the firm's cost.
    Keywords: State-owned firms, privatization, debt, information asymmetry
    JEL: L33 G32
    Date: 2012
  7. By: Schröder, Andreas
    Abstract: This article presents an electricity dispatch model with endogenous electricity generation capacity expansion for Germany over the horizon 2035. The target is to quantify how fuel price uncertainty impacts investment incentives of thermal power plants. Results point to ndings which are in line with general theory: Accounting for stochasticity increases investment levels overall and the investment portfolio tends to be more diverse. --
    JEL: C63 L13 L94
    Date: 2012
  8. By: Ahmad Komarulzaman (Department of Economics, Padjadjaran University); Ben Satriatna (Department of Economics, Padjadjaran University)
    Abstract: Clean water provision still becomes a problem faced by developing countries, including Indonesia. One of the factors contributing to this problem is limited financial capability of the government. Therefore, if the government intend to increase clean water service coverage, they should be carefully choosing the most efficient strategy. This study tries to help the government of Bandung Regency in Indonesia to increase water service coverage by examining two different alternatives in provision of clean water service, which are small scale and large scale piped system. By employing Benefit Cost Analysis (BCA) this study found that despite the cost to develop large scale piped system is higher, the benefit gained from the system is significantly far exceeded the benefit of small system. As a result, the large system produces larger net benefit than the small one. The benefit of large scale piped system mainly contributed by illness incident and time saving for collecting water.
    Keywords: Clean water services, large scale piped system, Bandung Regency, Indonesia
    JEL: D61 I38 O21 Q25
    Date: 2013–01
  9. By: Delis, Manthos D; Iosifidi, Maria; Tsionas, Efthymios
    Abstract: This article proposes a general empirical method for the estimation of marginal cost of individual firms. The new method employs the smooth coefficient model, which has a number of appealing features when applied to cost functions. The empirical analysis uses data from a unique sample from which we observe marginal cost. We compare the estimates from the proposed method with the true values of marginal cost, and the estimates of marginal cost that we obtain through conventional parametric methods. We show that the proposed method produces estimated values of marginal cost that very closely approximate the true values of marginal cost. In contrast, the results from conventional parametric methods are significantly biased and provide invalid inference.
    Keywords: Estimation of marginal cost; Parametric models; Smooth coefficient model; Actual and simulated data
    JEL: C14 C81 Q40 D24 G21
    Date: 2012–12–01
  10. By: Ying Liu (University of Wollongong); Kankesu Jayanthakumaran (University of Wollongong); Frank Neri (University of Wollongong)
    Abstract: Most climate scientists around the world are concerned about global warming. These concerns have resulted in calls for reductions in CO2 emissions over time. If these calls are to be heeded, an appropriate emissions accounting method must first be agreed upon by CO2 emitting countries, none of which are more important than China. This paper estimates China’s CO2 emissions in 2002 and in 2007 using firstly a production-based, and then a consumption-based, accounting method, both in aggregate and at the sectoral industry level. Our objectives are firstly to investigate the recent trends in Chinese emissions of CO2, and secondly to reveal the extent of the differences in the estimates produced by these two methods. Our estimates confirm what others have found, namely that Chinese emissions of CO2 increased substantially over this relatively short time period. Furthermore, the consumption-based method results in China being responsible for 38% fewer emissions in 2007 than would be the case with the production-based method. Problems caused by global warming will only be ameliorated if an acceptable worldwide distribution of responsibilities for emissions reduction efforts can be found. We believe that the consumption based method is more appropriate because it allocates responsibilities according to final consumption.
    Keywords: CO2 emissions, China, Accounting Methods
    JEL: Q01 Q53 Q58
    Date: 2012
  11. By: Tatsuro Iwaisako (Graduate School of Economics, Osaka University)
    Abstract: This paper examines the welfare-maximizing degree of patent protection in a growth model where the engines of economic growth are R&D and public services. We find that an increase in public services enhances the positive and negative effects of strengthening patent protection on R&D and the volume of production, respectively. However, if public services are relatively small, the negative welfare effect associated with the decrease in production volume tends to outweigh the positive welfare effect from the increase in the growth rate, and so the welfare-maximizing degree of patent protection tends to be lower. This result provides one possible explanation for why developing countries tend to prefer weaker patent protection.
    Keywords: endogenous growth, patent protection, public services, welfare analysis
    JEL: O34 O38 O40
    Date: 2012–12
  12. By: Rostam-Afschar, Davud
    Abstract: I exploit the amendment to the German Trade and Crafts Code in 2004 as a natural experiment to asses the causal effects of this reform on the probabilities of being self-employed and of transition into and out of self-employment using repeated cross sections (2002-2006) of German Microcensus data. I apply the Difference-in-Differences technique in logit models for four occupational groups. The results show that easing the educational entry requirement has fostered self-employment significantly for craftsmen after the reform by increasing the entry probability substantially, while exit rates remained unaffected. Similar, but weaker effects are found for the other occupational groups. --
    JEL: L51 J24 M13
    Date: 2012

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