nep-reg New Economics Papers
on Regulation
Issue of 2013‒03‒23
nine papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Australian Renewable Energy Policy: Barriers and Challenges By Liam Byrnes; Colin Brown; John Foster; Liam Wagner
  2. Duopoly Competition and Regulation in a Two-Sided Health Care Insurance Market with Product Differentiation By Audrey Boilley
  3. Regulation of Pharmaceutical Prices: Evidence from a Reference Price Reform in Denmark By Kaiser, Ulrich; Méndez, Susan J.; Rønde, Thomas; Ullrich, Hannes
  4. Hospital specialisation within a DRG-Framework: The Austrian Case By Conrad Kobel; Engelbert Theurl
  5. Monopolistic Sequestration of European Carbon Emissions By Niko Jaakkola
  6. Can a Unilateral Carbon Tax Reduce Emissions Elsewhere? By Joshua Elliott; Don Fullerton
  7. Broadband Networks and Open Access By OECD
  8. Double moral hazard and the energy efficiency gap By Louis-Gaëtan Giraudet; S. Houde
  9. Directing Technical Change from Fossil-Fuel to Renewable Energy Innovation: An Empirical Application Using Firm-Level Patent Data By Joëlle Noailly; Roger Smeets

  1. By: Liam Byrnes (Department of Economics, University of Queensland); Colin Brown (School of Agriculture and Food Sciences); John Foster (Department of Economics, University of Queensland); Liam Wagner (Department of Economics, University of Queensland)
    Abstract: Australia’s renewable energy policy has taken significant steps towards encouraging the deployment of lower carbon emissions energy generation. Effective policy and regulatory frameworks are paramount to incentivising the deployment of renewable energy to achieve long term reductions in carbon emissions. However significant policy barriers still exist at the federal and state levels, which have reduced the effectiveness of a concerted national effort to deploy renewables. The current policy landscape has largely favoured mature technologies which present the lowest investment risk at the expense of emerging options which may present greater efficiency and emissions reduction gains. The lack of support for emerging technologies delays their effective deployment and the accumulation of highly skilled human capital, until the medium to long term. This paper outlines the key policy frameworks, incentives and regulatory environment which encompasses the renewable energy sector, and presents a critical analysis of the barriers faced by the industry.
    Keywords: Australia; Renewable Energy; Energy Policy
    JEL: Q42 Q28 Q50
    Date: 2013–03
  2. By: Audrey Boilley (CRESE, Université de Franche-comté)
    Abstract: We compare duopoly competition with a regulated public monopoly in the health care insurance sector using the two-sided market approach. Health plans allow policyholders and physicians to interact. Policyholders have a preference for one of two health plans and value the diversity of physicians. Physicians value the number of policyholders because they are paid on a fee-for-service basis. This is a positive network externality. We find that the resulting Nash equilibria are explained by the two standard effects of product differentiation: the price competition effect and the market share effect, and by two opposing effects related to the network externality. We call these the positive earning effect and the negative spending effect. Overall the comparison between the two types of organizations shows that regulation is preferred when the physicians' market is not covered and competition is preferred when it is covered. But each time the choice is made at the expense of one type of agent.
    Keywords: Two-Sided Markets, Managed Care Competition, Network Effects, Product Differentiation, Hotelling, Public Policy
    JEL: C72 D21 D43 L11
    Date: 2013–03
  3. By: Kaiser, Ulrich (University of Zurich); Méndez, Susan J. (University of Zurich); Rønde, Thomas (Copenhagen Business School); Ullrich, Hannes (University of Zurich)
    Abstract: Reference prices constitute a main determinant of patient health care reimbursement in many countries. We study the effects of a change from an "external" (based on a basket of prices in other countries) to an "internal" (based on comparable domestic products) reference price system. We find that while our estimated consumer compensating variation is small, the reform led to substantial reductions in list and reference prices as well as co-payments, and to sizeable decreases in overall producer revenues, health care expenditures, and co-payments. These effects differ markedly between branded drugs, generics, and parallel imports with health care expenditures and producer revenues decreasing and co-payments increasing most for branded drugs. The reform also induced consumers to substitute from branded drugs – for which they have strong preferences – to generics and parallel imports. This substitution also explains the small increase in consumer welfare despite a substantial decrease in expenditures.
    Keywords: pharmaceutical markets, regulation, co-payments, reference pricing, welfare effects
    JEL: I18 C23
    Date: 2013–02
  4. By: Conrad Kobel; Engelbert Theurl
    Abstract: Evaluation of the true relationship between costs and specialisation in hospitals is hindered by the lack of a standard measure. Specialised hospitals might produce at lower costs because their staff builds expertise and care is better organised. On the other hand specialised hospitals might be more costly because they systematically attract sicker patients within each diagnosis-related group (DRG) or have special equipment available. We compare three common measures of specialisation and introduce an alternative, which builds on the widely used Gini coefficient, and investigate the influence of the Austrian provincial health-policy making on specialisation. Although the four measures differ in definition, they show high concordance and prove to assess hospital specialisation in a robust way. With the exception of university hospitals, measured specialisation complies with the different hospital types as defined by legislation in Austria. We find no significant time trend towards more specialisation and legislation on provincial level seems to have a small impact on hospital specialisation. However, caution should be paid to skewness, so that outliers do not inappropriately influence the results when evaluating the true relationship between costs and the specialisation of hospitals. Overall, the Austrian DRG framework introduced in 1997 and regional regulation by the Provinces have not led to more specialised hospitals. This finding challenges the expected impact of activity based funding on specialisation, but it may reflect the lack of incentives set by the Austrian DRG framework and the Provinces.
    Keywords: Hospital specialisation, Hospital financing, Herfindahl-Hirschman index, Information theory index, Gini coefficient, Decomposition of Inequality, Austria
    JEL: I12 I18 L10 L23 L25 L32
    Date: 2013–03
  5. By: Niko Jaakkola
    Abstract: Mitigating climate change by carbon capture and storage (CCS) will require vast infrastructure investments. These investments include pipeline networks for transporting carbon dioxide (CO2) from industrial sites ('sources') to the storage sites ('sinks'). This paper considers the decentralised formation of trunk-line networks when geological storage space is exhaustible and demand is increasing. Monopolistic control of an exhaustible resource may lead to overinvestment and/or excessively early investment, as these allow the monopolist to increase her market power. The model is applied to CCS pipeline network formation in northwestern Europe. The features identified above are found to play a minor role. Should storage capacity be effectively inexhaustible, underinvestment due to the inability of the monopolist to capture the entire social surplus is likely to have substantial welfare impacts. Multilateral bargaining to coordinate international CCS policies is particularly important if storage capacity is plentiful.
    Keywords: carbon capture and storage, exhaustible resources, network formation, spatial networks
    JEL: L50 Q31 Q58
    Date: 2013
  6. By: Joshua Elliott; Don Fullerton
    Abstract: One country that tries to reduce greenhouse gas emissions may fear that other countries get a competitive advantage and increase emissions (“leakage”). Estimates from computable general equilibrium (CGE) models such as Elliott et al (2010a,b) indicate that 15% to 25% of abatement might be offset by leakage. Yet the Fullerton et al (2012) analytical general equilibrium model shows an offsetting term with negative leakage. To derive analytical expressions, their model is quite simple, with only one good from each country or sector, a fixed stock of capital, competitive markets, and many identical consumers that purchase both goods. Their model is not intended to be realistic, but only to demonstrate the potential for negative leakage. Most CGE models do not allow for negative leakage. In this paper, we use a full CGE model with many countries and many goods to measure effects in a way that allows for negative leakage. We vary elasticities of substitution and confirm the analytical model’s prediction that negative leakage depends on the ability of consumers to substitute into the untaxed good and the ability of firms to substitute from carbon emissions into labor or capital.
    JEL: H23 Q56 Q58
    Date: 2013–03
  7. By: OECD
    Abstract: This report examines “open access” policies and approaches in various contexts, including fixed and mobile access networks, backhaul and backbone networks, undersea cables and Internet exchange points (IXPs). It finds that open access arrangements share some common elements: they refer to wholesale access to network infrastructure or services that is provided effectively on fair and reasonable terms, for which there is some degree of transparency and non-discrimination.
    Date: 2013–03–04
  8. By: Louis-Gaëtan Giraudet (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD : UMR56 - CNRS : UMR8568 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - AgroParisTech); S. Houde (MS&E - Department of Management Science and Engineering [Stanford] - Stanford University)
    Abstract: Moral hazard issues can deter profitable investments in energy efficiency. Energy-savings insurance and quality standards can mitigate the problem - yet not eliminate it.
    Date: 2013
  9. By: Joëlle Noailly; Roger Smeets
    Abstract: This paper investigates the determinants of directed technical change in the electricity generation sector. We use firm-level data on patents filed in renewable (REN) and fossil fuel (FF) technologies by about 7,000 European firms over the period 1978-2006. We separately study specialized firms, that innovate in only one type of technology during the sample period, and mixed firms, that innovate in both technologies. We find that for specialized firms the main drivers of innovation are fossil-fuel prices, market size, and firms' past knowledge stocks. Also, prices and market size drive the entry of new REN firms into innovation. By contrast, we find that innovation by mixed firms is mainly driven by strong path-dependencies since for these firms past knowledge stock is the major driver of the direction of innovation. These results imply that generic environmental policies that affect prices and energy demand are mainly effective in directing innovation by small specialized firms. In order to direct innovation efforts of large mixed corporations with a long history of FF innovation, targeted R&D policies are likely to be more effective.
    JEL: Q4 Q55
    Date: 2013–03

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