nep-reg New Economics Papers
on Regulation
Issue of 2013‒07‒05
seven papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Mixing It Up: Power Sector Energy and Regional and Regulatory Climate Policies in the Presence of a Carbon Tax By Burtraw, Dallas; Palmer, Karen L.
  2. Connection charges and electricity access in Sub-Saharan Africa By Golumbeanu, Raluca; Barnes, Douglas
  3. Estimating the Impact of Low-Income Universal Service Programs By Daniel A. Ackerberg; David R. DeRemer; Michael H. Riordan; Gregory L. Rosston
  4. Revisiting the Merit-Order Effect of Renewable Energy Sources By Marcus Hildmann; Andreas Ulbig; G\"oran Andersson
  5. The marginal cost of public funds in the EU: the case of labour versus green taxes By Salvador Barrios; Jonathan Pycroft; Bert Saveyn
  6. Market and Welfare Effects of Renewable Portfolio Standard in the Vertically Differentiated U.S. Energy Markets By Bhattacharya, Suparna; Giannakas, Konstantinos; Schoengold, Karina
  7. The Policy Elasticity By Nathaniel Hendren

  1. By: Burtraw, Dallas (Resources for the Future); Palmer, Karen L. (Resources for the Future)
    Abstract: A carbon tax will interact with other policies that are intended to reduce carbon dioxide emissions and encourage clean sources of energy and energy efficiency. This paper examines these policy interactions. A well-designed carbon tax can be an efficient instrument for reducing emissions, yet whether it will be implemented in an efficient manner is uncertain. A legislatively determined tax may not fully reflect up-to-date scientific and economic information. Behavioral and institutional factors suggest that a tax may not have its fully intended effect. These considerations suggest that climate policy should and will continue to be a complex mix of regulations at various levels of government, even with a carbon price. Nonetheless, the possibility of unintended interactions among policies remains. The role for policies to encourage renewables and energy efficiency depends on the stringency of the carbon tax and presence of externalities related to technological learning and the energy efficiency gap.
    Keywords: externalities, regulation, federalism, Clean Air Act
    JEL: Q58 H23 H77
    Date: 2013–04–17
  2. By: Golumbeanu, Raluca; Barnes, Douglas
    Abstract: Sub-Saharan Africa trails other regions in providing access to electricity for poor urban and rural residents. This poor performance can be linked to various factors, including political interference in utility policy, higher investment costs and lower profitability of extending service to rural areas. But a major obstacle to wider access is the high charges consumers must pay to connect to the electricity network. The connection charges in Sub-Saharan Africa are among the highest in the world, which has resulted in low rates of electrification in many countries. This paper reviews ways to improve electrification rates by addressing the issue of high connection charges. Essential to the success of such efforts is concurrent political commitment to identify, examine, and implement various low-cost electrification approaches and financing solutions as part of a broad plan to improve access. Electricity companies can lower their connection-related costs, and thus consumer charges, by using a variety of low-cost technologies and materials in distribution networks and household connections; making bulk purchases of materials; and adjusting technical standards to reflect the lower loads of households that use a minimum amount of electricity. Strategies for lowering connection charges may also include spreading charges over a reasonable period, rolling them into monthly service payments, subsidizing connections, or amortizing them through loans. Lowering connection charges is not the only step, but it is an essential part of any strategy for addressing the electricity access gap between rich and poor households in Sub-Saharan Africa, a gap that denies millions of poor Africans the benefits of electricity.
    Keywords: Energy Production and Transportation,Access to Finance,E-Business,Engineering,Electric Power
    Date: 2013–06–01
  3. By: Daniel A. Ackerberg; David R. DeRemer; Michael H. Riordan; Gregory L. Rosston
    Abstract: This policy study uses U.S. Census microdata to evaluate how subsidies for universal telephone service vary in their impact across low-income racial groups, gender, age, and home ownership. Our demand specification includes both the subsidized monthly price (Lifeline program) and the subsidized initial connection price (Linkup program) for local telephone service. Our quasimaximum likelihood estimation controls for location differences and instruments for price endogeneity. The microdata allow us to estimate the effects of demographics on both elasticities of telephone penetration and the level of telephone penetration. Based on our preferred estimates, the subsidy programs increased aggregate penetration by 6.1% for low-income households. Our results suggest that Linkup is more cost-effective than Lifeline and that auto-enroll policies are important, which calls into question a recent FCC (2012) decision to reduce Linkup subsidies in favor of Lifeline. Our study can inform the evaluation of similar universal service policies for Internet access.
    Date: 2013–06
  4. By: Marcus Hildmann; Andreas Ulbig; G\"oran Andersson
    Abstract: An on-going debate in the energy economics and power market community has raised the question if energy-only power markets are increasingly failing due to growing in-feed shares from subsidized renewable energy sources (RES). The short answer to this is: No, they are not failing! Energy-based power markets are, however, facing several market distortions, namely from the gap between the electricity volume traded at spot markets versus the overall electricity consumption as well as the (wrong) regulatory assumption that variable RES generation, i.e., wind and PV, have zero marginal operation costs. This paper shows that both effects overamplify the well-known merit-order effect of RES power in-feed beyond a level that can still be explained by the underlying physical realities.In this paper we analyze the current situation of wind and photovoltaic (PV) power in-feed in the German electric power system and their effect on the spot market. We show a comparison of the FIT-subsidized renewable energy sources (RES) energy production volume to the spot market volume and the overall load demand. Furthermore, a spot market analysis based on the assumption that renewable energy sources (RES) units have to feed-in with their assumed true marginal costs, i.e., operation and maintenance costs, is performed. Our combined analysis results show that, if the necessary regulatory adaptations are taken, i.e., significantly increasing the spot market's share of overall load demand and using true marginal costs of RES units in the merit-order, energy-based power markets can remain functional despite very high RES power in-feed.
    Date: 2013–07
  5. By: Salvador Barrios (European Commission); Jonathan Pycroft (European Commission); Bert Saveyn (European Commission)
    Abstract: One key objective of tax-based fiscal consolidations which is too often disregarded in public debate is to minimise economic distortions. This paper uses a computable general equilibrium model to gauge these potential distortions by calculating the marginal cost of public funds (MCF) for EU member states. We consider two specific tax categories which are often proposed as good candidates for efficiency-enhancing tax shifting policies: labour and green taxes. Our analysis suggests that the economic distortions provoked by labour taxes are significantly larger than for green taxes. This result suggests that a green-taxes oriented fiscal consolidation would be preferred to a labour-tax oriented one (assuming that both tax increases would yield the same tax revenues). This holds for all EU member states modelled and despite the fact that potential welfare enhancement through pollution abatement are cancelled-out. Nevertheless, this result is slightly less strong when one considers the spillover effects between countries, which are more pronounced (in relative terms) for green taxes. This suggests that the use of green taxes for fiscal consolidation would be more effective were there to be close coordination across EU countries. In addition the efficiency losses associated with labour taxes are also likely to be greater when labour markets are less flexible (from an efficiency-wage perspective), a result also found to a small extent for green taxes. This raises the possibility that undertaking structural reforms (especially in the labour market) would help to minimize the efficiency losses entailed by tax-driven fiscal consolidations.
    Keywords: European Union, Taxation, labour taxation, environment, marginal cost public funds
    JEL: H21 H23 H24
    Date: 2013–05
  6. By: Bhattacharya, Suparna; Giannakas, Konstantinos; Schoengold, Karina
    Keywords: Demand and Price Analysis, Production Economics, Resource /Energy Economics and Policy,
    Date: 2013
  7. By: Nathaniel Hendren
    Abstract: This paper provides a generic framework for evaluating the welfare impact of government policy changes towards taxes, transfers, and publicly provided goods. The results show that the behavioral response required for welfare measurement is the causal impact of each agent’s response to the policy on the government’s budget. A decomposition of this response into income and substitution effects is not required. Because these desired elasticities vary with the policy in question, I term them policy elasticities. I also provide an additivity condition that yields a natural definition of the marginal costs of public funds as welfare impact of a policy per dollar of its cost to the government budget. Finally, I use the model, along with causal estimates from existing literature, to study the welfare impact of additional redistribution by increasing the generosity of the earned income tax credit financed by an increase in the top marginal income tax rate. I show existing causal estimates suggest additional redistribution is desirable if and only if providing an additional $0.44 to an EITC-eligible single mother (earning less than $40,000) is preferred to providing an additional $1 to a person subject to the top marginal tax rate (earning more than $400,000).
    JEL: D6 H0 I3
    Date: 2013–06

This nep-reg issue is ©2013 by Natalia Fabra. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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