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on Regulation |
| By: | Lukasz Grzybowski (Telecom ParisTech, Department of Economics and Social Sciences, 46 rue Barrault, 75013 Paris, France); Frank Verboven (University of Leuven and CEPR (London), Naamsestraat 69, 3000 Leuven, Belgium) |
| Abstract: | We use rich survey data on 133,825 households from 27 EU countries during 2005-2011 to analyze substitution between fixed-line and mobile telecommunications services. We estimate a discrete choice model where households may choose between having mobile or fixed-line voice access only, or using both technologies at the same time. We obtain the following main findings. First, fixed-line and mobile connections are on average perceived as substitutes. But there is substantial heterogeneity across households and EU regions, with stronger substitution in Central and Eastern European countries. Second, there is strong complementarity between fixed-line and mobile connections that are offered by the fixed-line incumbent operator. This gives the incumbent a possibility to leverage its position in the fixed-line market into the mobile market. Third, fixed broadband technologies such as DSL and cable generate strong complementarities between fixed and mobile access, while mobile broadband strengthens substitution (at a smaller scale). The emergence of fixed broadband has thus been an important additional source through which incumbents leverage their strong position in the fixed-line network. |
| Keywords: | fixed-to-mobile substitution; incumbency advantage; broadband access |
| JEL: | L13 L43 L96 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1309&r=reg |
| By: | Anat R. Admati (Graduate School of Business, Stanford University); Peter M. DeMarzo (Graduate School of Business, Stanford University); Martin F. Hellwig (Max Planck Institute for Research on Collective Goods); Paul Pfleiderer (Graduate School of Business, Stanford University) |
| Abstract: | Shareholder-creditor conflicts can create leverage ratchet effects, resulting in inefficient capital structures. Once debt is in place, shareholders may inefficiently increase leverage but avoid reducing it no matter how beneficial leverage reduction might be to total firm value. We present conditions for an irrelevance result under which shareholders view asset sales, pure recapitalization and asset expansion with new equity as equally undesirable. We then analyze how seniority, asset heterogeneity, and asymmetric information affect shareholders’ choice of leverage-reduction method. Our results are particularly relevant to banking and highlight the benefit and importance of capital regulation to constrain inefficient excessive borrowing. |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2013_13&r=reg |
| By: | Dominic K. Albino; Anzi Hu; Yaneer Bar-Yam |
| Abstract: | In a market system, regulations are designed to prevent or rectify market failures that inhibit fair exchange, such as monopoly or transactions with hidden costs. Because regulations reduce profits to those possessing unfair advantage, these advantaged corporations (whether individuals, companies, or other collective organizations) are motivated to influence regulators. Regulatory bodies created to protect the market are instead co-opted to advance the interests of the corporations they are charged to regulate. This wide-spread influence, known as "regulatory capture," has been recognized for over 100 years, and according to expectations of rational behavior, will exist wherever it is in the mutual self-interest of corporations and regulators. Here we model the interaction between corporations and regulators using a new game theory framework explicitly accounting for players' mutual influence, and demonstrate the incentive for collusion. Communication between corporations and regulators enables them to collude and split the resulting profits. We identify when collusion is profitable for both parties. The intuitive results show that capture occurs when the benefits to the corporation outweigh the costs to the regulator. Under these conditions, the corporation can compensate the regulator for costs incurred and, further, provide a profit to both parties. In the real world, benefits often far outweigh costs, providing large incentives to collude and making capture likely. Regulatory capture is inhibited by decreasing the influence between parties through strict separation, independent market knowledge and research by regulators, regulatory and market transparency, regulatory accountability for market failures, widely distributed regulatory control, and anti-corruption enforcement. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1310.0057&r=reg |
| By: | Larsson, Simon; Fantazzini, Dean; Davidsson, Simon; Kullander, Sven; Hook, Mikael |
| Abstract: | A thorough review of twelve recent studies of production costs from different power generating technologies was conducted and a wide range in cost estimates was found. The reviewed studies show differences in their methodologies and assumptions, making the stated cost figures not directly comparable and unsuitable to be generalized to represent the costs for entire technologies. Moreover, current levelized costs of electricity methodologies focus only on the producer's costs, while additional costs viewed from a consumer perspective and on external costs with impact on society should be included if these results are to be used for planning. Although this type of electricity production cost assessments can be useful, the habit of generalizing electricity production cost figures for entire technologies is problematic. Cost escalations tend to occur rapidly with time, the impact of economies of scale is significant, costs are in many cases site-specific, and country-specific circumstances affect production costs. Assumptions on the cost-influencing factors such as discount rates, fuel prices and heat credits fluctuate considerably and have a significant impact on production cost results. Electricity production costs assessments similar to the studies reviewed in this work disregard many important cost factors, making them inadequate for decision and policy making, and should only be used to provide rough ballpark estimates with respect to a given system boundary. Caution when using electricity production cost estimates are recommended, and further studies investigating cost under different circumstances, both for producers and society as a whole are called for. Also, policy makers should be aware of the potentially widely different results coming from electricity production cost estimates under different assumptions. |
| Keywords: | Electricity generation costs, levelized costs, energy market analysis, cost comparisons, policy implications |
| JEL: | L94 Q00 Q20 Q30 Q40 Q48 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:50306&r=reg |
| By: | Heymi Bahar; Jagoda Egeland; Ronald Steenblik |
| Abstract: | In recent years the manufacturing of renewable-energy technologies has become truly global. The associated rise in international investment and trade in goods and services related to renewable energy has been rapid, but it has not always been smooth. Already there have been challenges at the WTO, and the unilateral imposition of countervailing and anti-dumping duties, in response to some countries‘ policies on the grounds that they distort trade. Against this background, this paper surveys, through the lenses of market-pull and technology-push policies, the numerous domestic incentives used by governments to promote renewable energy, focusing on those that might have implications for trade — both those that are likely to increase opportunities for trade and those that may be inhibiting imports or promoting exports. Many OECD countries, and an increasing number of non-OECD countries, have established national targets for renewable energy. To help boost the rate of penetration of renewable energy in their economies, most of the same countries are providing additional incentives. Market-pull incentives for the deployment of renewable-energy-based electricity generating plants include quota systems, usually administrated through "green" certificates, and fixed per kilowatt-hour feed-in tariffs and premiums. Renewable fuels for transport are typically promoted by governments through obliging fuel suppliers to mix ethanol or biodiesel with their corresponding petroleum-derived fuels. Frequently, renewable fuels for transport also benefit from exemptions, or reductions in, fuel-excise taxes, and in a few countries from production bounties. Many national and sub-national governments also support capital formation in these industries with grants, subsidised loans, loan guarantees, or a combination of instruments. In some jurisdictions, access to government support schemes have been made conditional upon meeting certain minimum levels of domestic content. Such domestic-content requirements are highly controversial because of their direct effects on trade. These effects, and the effects of other policies in combination and in isolation, are examined through a graphical analysis of generic policies, using a simplified stylised representation of the relevant markets. The basic message is that while many domestic incentives are both increasing the supply of renewable energy and facilitating trade in associated technologies and renewable fuels, some — especially those combined with border protection or domestic-content requirements — are likely reducing export opportunities for foreign suppliers, and raising domestic prices for renewable energy as a consequence. |
| Keywords: | trade, environment, renewable energy, environmental subsidies, bioenergy, biofuels |
| JEL: | F18 H23 L98 O38 Q42 Q56 Q58 |
| Date: | 2013–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaaa:2013/1-en&r=reg |
| By: | Stein-Erik, Fleten; Paraschiv, Florentina; Schürle, Michel |
| Abstract: | We propose a novel regime-switching approach for the simulation of electricity spot prices that is inspired by the class of fundamental models and takes into account the relation between spot and forward prices. Additionally the model is able to reproduce spikes and negative prices. Market prices are derived given an observed forward curve. We distinguish between a base regime and an upper as well as a lower spike regime. The model parameters are calibrated using historical hourly price forward curves for EEX Phelix and the dynamic of hourly spot prices. We further evaluate different time series models such as ARMA and GARCH that are usually applied for modeling electricity prices and conclude a better performance of the proposed regime-switching model. |
| Keywords: | electricity prices, regime-switching model, negative prices, spikes, price forward curves |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:usg:sfwpfi:2013:11&r=reg |
| By: | Jason Chan (New York University, Stern School of Business, IOMS Department); Anindya Ghose (New York University, Stern School of Business, IOMS Department); Robert Seamans (New York University, Stern School of Business, Management Department) |
| Abstract: | The Internet has had profound effects on society, both positive and negative. In this paper we examine the effect of the Internet on a negative spillover: hate crime. In order to better understand the link, we study the extent to which broadband availability affects racial hatecrimes in the US from 1999 – 2008. To address measurement error, we instrument for broadband availability using slope of terrain. We find strong evidence that broadband availability increases racial hate crimes. The results are stronger in areas with greater racial segregation and with more online searches for racist words, suggesting that the direct effect of the Internet on hate crime is primarily due to a heightening of pre-existing propensities to engage in hate activity. We find no evidence that the Internet has affected crime reporting. The results are robust to alternative specifications and falsification tests. These results shed light on one of the many offline spillovers from increased online access, and suggest that governmental and private regulation of online content may help reduce hate crime. |
| Keywords: | Internet, broadband, online-offline interaction, hate crime, race |
| JEL: | C26 J15 K49 O33 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1302&r=reg |
| By: | Claire Brunel; Arik Levinson |
| Abstract: | Researchers have long been interested in whether environmental regulations discourage investment, reduce labour demand, or alter patterns of international trade. But estimating those consequences of regulations requires devising a means of measuring their stringency empirically. While creating such a measure is often portrayed as a data-collection problem, we identify four fundamental conceptual obstacles, which we label multidimensionality, simultaneity, industrial composition, and capital vintage. We then describe the long history of attempts to measure environmental regulatory stringency, and assess their relative success in light of those obstacles. Finally, we propose a new measure of stringency that would be based on emissions data and could be constructed separately for different pollutants. |
| Keywords: | trade and environment, environmental regulations, environmental subsidies |
| JEL: | C26 C43 C83 D78 F18 L51 Q52 Q53 Q58 |
| Date: | 2013–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaaa:2013/5-en&r=reg |
| By: | Paraschiv, Florentina |
| Abstract: | With the liberalization of global power markets, modeling of exchange traded electricity contracts has attracted significantly the attention of both academic and industry. In this paper we offer an overview of the most common deseasonalization techniques and modeling approaches in the literature. We extract the deterministic component of EEX Phelix hourly electricity prices and we discuss different financial and time series models for their stochastic component. Additionally, we apply Extreme Value Theory (EVT) to investigate the tails of the price changes distribution. Generally our results suggest EVT to be of interest to both risk managers and portfolio managers in the highly volatile electricity markets. |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:usg:sfwpfi:2013:14&r=reg |