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on Regulation |
| By: | Luis Ángel Herrera; Juan Rosellón |
| Abstract: | To date, the distributive implications of incentive regulation on electricity transmission networks have not been explicitly studied in the literature. More specifically, the parameters that a regulator might use to achieve distributive efficiency under price-cap regulation have not yet been identified. To discern these parameters is the motivation for the research presented in this paper. We study how different weight parameters affect the distributive characteristics of optimal price-cap incentive regulation for electricity transmission. We find that a regulator's use of ideal (Laspeyres) weights tends to be more beneficial for the Transco (consumers) than for consumers (the Transco). |
| Keywords: | Electricity transmission, incentive regulation, distributive efficiency |
| JEL: | L50 L51 L94 Q40 Q42 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1327&r=reg |
| By: | Francisca Bremberger; Carlo Cambini; Klaus Gugler and Laura Rondi |
| Abstract: | We study the impact of different regulatory and ownership regimes on the dividend policy of regulated firms. Using a panel of 106 publicly traded European electric utilities in the period 1986-2010, we link payout and smoothing decisions to the implementation of different regulatory mechanisms (cost plus vs. incentive regulation) and to firm ownership (state vs. private). After controlling for the potential endogeneity of the regulatory mechanism, our results show that utilities subject to incentive regulation smooth their dividends less than firms subject to cost-based regulation and present higher impact effects and target payout ratios. This suggests that when managers are more sensitive to competition-like efficiency pressures following the adoption of incentive regulation, they adopt a dividend policy more responsive to earnings variability and more consistent with optimal cash management. These results, however, apply only to private utilities. If the state still has ultimate control, smoothing of dividends remains irrespective of the regulatory mechanism. It seems that corporate governance (i.e. state control) trumps regulation when it comes to dividend payout policy. |
| Keywords: | Dividends, Lintner model, incentive regulation, electricity |
| JEL: | G35 G38 L51 L94 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2013/53&r=reg |
| By: | Adrien Nguyen Huu (FiME Lab) |
| Abstract: | We investigate a randomization procedure undertaken in real option games which can serve as a raw model of regulation in a duopoly model of preemptive investment. We recall the rigorous framework of [Grasselli, M.R., Lecl\`ere, V. and Ludkovski, M. Priority option: the value of being a leader. Math. and Fin. Econ., 2013] and extend it to the presence of a random regulator. This model generalizes and unifies the different competitive frameworks proposed in the literature, and creates a new one similar to a Stackelberg leadership. We fully characterize strategic interactions in the several situations following from the parametrization of the regulator. Finally, we study the effect of the coordination game and uncertainty of outcome when agents are risk-averse, providing new intuitions for the standard case. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1309.1844&r=reg |
| By: | Stephen Lecourt |
| Abstract: | In its third Phase (2013-20), the European Union Emissions Trading Scheme allocation methodology is shifting from grandfathering to a combination of auctioning and benchmarking. Free allocation is now be devoted to non-electricity generators only (save exemption), and is linearly decreasing throughout the Phase with a view of no free allocation in 2027. Benchmark-based free allocation is meant to reward lowest CO2-intensive installations as opposed to grandfathering, which allocated allowances based on historical emissions levels. This policy note describes the concrete implications involved by this shift in allocation methodology, and addresses the potential flaws of benchmarking-based allocation, using data from French nstallations’ Phase 3 provisional free allocation. |
| Keywords: | EU ETS, Benchmarks, Preliminary amounts, Carbon leakage, Historical Activity Level |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cec:wpaper:1305&r=reg |
| By: | CANTA, Chiara (Université catholique de Louvain, Louvain School of Management and CORE, Belgium); LEROUX, Marie-Louise (Département des Sciences Economiques, UQAM, Canada; Université catholique de Louvain, CORE, Belgium) |
| Abstract: | This paper studies how congestion in the public health sector can be used as a redistributive tool. In our model, agents differ in income and they can obtain a health service either from a congested public hospital or from a non congested private one at a higher price. With pure in-kind redistribution, agents fail to internalize their impact on congestion, and the demand for the public hospital is higher than optimal. We show that under full information, the optimal redistribution and sorting across hospitals can be obtained using a lump-sum tax and a subsidy on the private hospital. If income is not observable but the social planner can assign agents across hospitals, the optimal congestion is higher than in the first best in order to relax incentive constraints. Finally, if agents can freely choose across hospitals, the optimal subsidy on the private hospital price may be negative or positive depending on the relative importance of redistribution and efficiency concerns. |
| Keywords: | optimal taxation, mixed health care systems, waiting times, income redistribution |
| JEL: | H21 H23 H44 I11 |
| Date: | 2013–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2013041&r=reg |
| By: | Kristöfel, Christa; Morawetz, Ulrich; Schmid, Erwin |
| Abstract: | The current debate on biomass price volatility mainly refers to increased market dynamics and integration as well as renewable energy policy intervention. Higher price volatility leads to additional costs that are often shared and transmitted along the supply chain to the final consumers. We empirically analyze whether or not price volatility of woody biomass commodities has increased in recent years. Results indicate that the price volatility of some woody biomass commodities has increased, but it is still lower than of fossil fuels. |
| Keywords: | Price volatility, woody biomass, energy market, Demand and Price Analysis, Resource /Energy Economics and Policy, Risk and Uncertainty, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:gewi13:156148&r=reg |
| By: | Arne Beck; Heiner Bente; Martin Schilling |
| Abstract: | Railway efficiency is a topic of interest worldwide for railway managers operating in competitive markets and for fiscally strained governments. Several recent studies indicate that European railways differ in terms of their efficiency. Based on a comparison with some major non-European railway systems, our analysis provides further evidence that significant efficiency gaps exist. |
| Date: | 2013–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:oec:itfaab:2013/12-en&r=reg |
| By: | Kate Ho; Ariel Pakes |
| Abstract: | We estimate a preference function which rationalizes hospital referrals for privately-insured birth episodes in California. The function varies across insurers and is additively separable in: a hospital price paid by the insurer, the distance traveled, and plan and severity-specific hospital fixed effects (capturing various dimensions of hospital quality). We use an inequality estimator that allows for errors in price and detailed hospital-severity interactions and obtain markedly different results than those from a logit. The inequality estimator indicates that insurers with more capitated physicians are more responsive to hospital prices. Capitated plans are willing to send patients further to utilize similar-quality lower-priced hospitals; but the trade-off between quality and costs does not vary with capitation rates. |
| JEL: | I11 L1 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19333&r=reg |