nep-reg New Economics Papers
on Regulation
Issue of 2013‒09‒06
four papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. The Silver Lining of Price Spikes: How electricity price spikes can help overcome the energy efficiency gap By Mauritzen, Johannes
  2. Electricity Supply Preferences in Europe: Evidence from Subjective Well-Being Data By Heinz Welsch; Philipp Biermann
  3. The Trade and Health Effects of Tobacco Regulations By Gregmar Galinato; Aaron Olanie; Jon Yoder
  4. Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program and Ozone Reductions By Deschenes, Olivier; Greenstone, Michael; Shapiro, Joseph S.

  1. By: Mauritzen, Johannes (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: Studies have shown that many consumers and businesses fail to invest in energy efficiency improvements despite seemingly ample financial incentives to do so – the so-called energy efficiency gap. Attempts to explain this gap often focus on searching costs, information frictions and behavioral factors. Using data on Norwegian electricity prices and Google searches for heat pumps, I suggest that the inherently spikey nature of many deregulated electricity markets – often seen as a sign of inefficiency – has a strong and significant positive effect on searching for information on energy efficiency goods. I attempt to identify the informational/behavioral effect by using a novel method of measuring spikiness: decomposing the price series into a range of Loess smoothed series and deviations from these curves.
    Keywords: Price spikes; energy efficiency gap; deregulated electricity markets
    JEL: L00 L10 L50 Q00 Q40
    Date: 2013–08–29
  2. By: Heinz Welsch (University of Oldenburg, Department of Economics); Philipp Biermann (University of Oldenburg, Department of Economics)
    Abstract: We use survey data for 139,517 individuals in 26 European Countries, 2002-2011, to estimate the relationship between subjective well-being (SWB) and production shares of various types of electricity generation. The estimated relationships are taken to represent preference relationships over attributes of electricity supply systems (costs, safety, environmental friendliness etc.). Controlling for a variety of individual and macro-level factors, we find that individuals’ SWB varies systematically and significantly with differences in the electricity mix across countries and across time. Among other results, we find that a greater share of solar and wind power relative to nuclear power is associated with greater SWB and that the implied preference for solar and wind power over nuclear power has risen drastically after the Fukushima nuclear accident. In general, our results suggest that environmental and safety concerns are of major importance in European citizens’ preference function over electricity supply structures.
    Keywords: : energy mix; preference; subjective well-being; energy transition; Fukushima
    JEL: Q42 Q48 I31
    Date: 2013–08
  3. By: Gregmar Galinato; Aaron Olanie; Jon Yoder (School of Economic Sciences, Washington State University)
    Abstract: This paper examines how domestic and foreign tobacco regulations affect tobacco trade flows and consumer health in importing countries. We develop a gravity equation incorporating domestic and foreign tobacco regulations into a country’s tobacco import demand. We estimate the bilateral trade effects of marketing, counter-advertising, age and smoking tobacco location regulations. There are two striking results: smoking location regulations reduce tobacco exports and imports, and marketing regulations may actually increase tobacco trade. The magnitude of these effects is larger when the trading partners are rich exporters and poor importers. Using existing health effect elasticities in conjunction with our results, we show how these changes affect tobacco-related mortality and morbidity in importing countries. Our results highlight the importance of implementing policies that account for potential spillover effects in an increasingly multilateral economy.
    Keywords: bilateral trade effect; gravity model; tobacco regulation; mortality
    JEL: F14 I18
    Date: 2013–08
  4. By: Deschenes, Olivier (University of California, Santa Barbara); Greenstone, Michael (MIT); Shapiro, Joseph S. (Yale University)
    Abstract: Demand for air quality depends on health impacts and defensive investments that improve health, but little research assesses the empirical importance of defenses. We study an important cap-and-trade market, which dramatically reduced NOx emissions, a key ingredient in ozone formation. A rich quasi-experiment reveals that it decreased summertime ozone, pharmaceutical expenditures, and mortality rates. Reductions in pharmaceutical purchases and mortality are each valued at $900 million annually, suggesting that defensive investments are a substantial portion of willingness-to-pay. We cautiously conclude that ozone reductions are the primary channel for these effects, implying that ozone's costs are larger than previously understood.
    Keywords: pharmaceuticals, ozone, cap and trade, willingness to pay for air quality, mortality, compensatory behavior, human health
    JEL: H4 I1 Q4 Q5 D1
    Date: 2013–08

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