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on Regulation |
| By: | Gabriel M. Ahlfeldt (London School of Economics and Political Science (LSE) & Spatial Economics Research Centre (SERC)); Wolfgang Maennig (University of Hamburg) |
| Abstract: | We use a public referendum on a new air traffic concept in Berlin, Germany as a natural experiment to analyze how the interaction of tenure and capitalization effects shapes the outcome of direct democracy processes. We distinguish between homevoters, i.e., voters who are homeowners, and leasevoters, i.e., voters who lease their homes. We expect the former to be more likely to support or op-pose initiatives that positively or negatively affect the amenity value of a neighborhood because some of the related benefits or costs of the latter are neutralized by adjustments in market rents (capitalization). Our empirical results are in line with our theoretical expectations and imply that public votes on local public goods do not necessarily reflect the spatial distribution of welfare effects in mixed-tenure environments. |
| Keywords: | Referendum, homevoters, leasevoters, NIMBYism, rents, noise, airports, Berlin |
| JEL: | D61 D62 H41 H71 L83 I18 R41 R58 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2013/6/doc2013-15&r=reg |
| By: | Richard Schmalensee |
| Abstract: | Government subsidies have driven rapid growth in U.S. wind and solar generation. Using data on hourly outputs and prices for 25 wind and nine solar generating plants, some results of those subsidies are studied in detail: the value of these plants’ outputs, the variability of output at plant and regional levels, and the variation in performance among plants and regions. Output from solar plants was about 32% more valuable on average than output from wind plants. Output variability differs substantially among plants and, on some dimensions, among regions. Policy implications of high generation when prices are negative and dramatic differences in capacity factors are discussed. |
| JEL: | D24 L94 Q42 Q5 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19509&r=reg |
| By: | Frédéric Branger (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech); Oskar Lecuyer (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech); Philippe Quirion (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech) |
| Abstract: | The European Union Emissions Trading System (EU-ETS), presented as the ''flagship'' of European climate policy, is subject to many criticisms from different stakeholders. Criticisms include the insufficient carbon emissions reduction, the competitiveness losses and the induced carbon leakages, the unfair distributional effects, the frauds and the existence of several other overlapping climate policy instruments. We review these criticisms and find the EU-ETS brought small but real abatements. The competitiveness losses and carbon leakages do not seem to have occurred. The distributional effects have indeed been unfair and fraud has been important. Finally, the scheme does not justify abandoning other climate policies. Some of these problems could have been avoided and can still be corrected by rethinking flexibility mechanisms and by adding some control over the carbon price. |
| Date: | 2013–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00866408&r=reg |
| By: | Murray L. Aitken; Ernst R. Berndt; Barry Bosworth; Iain M. Cockburn; Richard Frank; Michael Kleinrock; Bradley T. Shapiro |
| Abstract: | We examine six molecules facing initial loss of US exclusivity (LOE, from patent expiration or challenges) between June 2009 and May 2013 that were among the 50 most prescribed molecules in May 2013. We examine prices per day of therapy (from the perspective of average revenue received by retail pharmacy per day of therapy) and utilization separately for four payer types (cash, Medicare Part D, Medicaid, and other third party payer – TPP) and age under vs. 65 and older. We find that quantity substitutions away from the brand are much larger proportionately and more rapid than average price reductions during the first six months following initial LOE. Brands continue to raise prices after generics enter. Expansion of total molecule sales (brand plus generic) following LOE is an increasingly common phenomenon compared with earlier eras. The number of days of therapy in a prescription has generally increased over time. Generic penetration rates are typically highest and most rapid for TPPs, and lowest and slowest for Medicaid. Cash customers and seniors generally pay the highest prices for brands and generics, third party payers and those under 65 pay the lowest prices, with Medicaid and Medicare Part D in between. The presence of an authorized generic during the 180-day exclusivity period has a significant impact on prices and volumes of prescriptions, but this varies across molecules. |
| JEL: | D01 D02 D43 I1 L65 L78 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19487&r=reg |
| By: | Oskar Lecuyer (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech); Philippe Quirion (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech) |
| Abstract: | This article constitutes a new contribution to the analysis of overlapping instruments to cover the same emission sources. Using both an analytical and a numerical model, we show that when the risk that the CO2 price drops to zero and the political unavailability of a CO2 tax (at least in the European Union) are taken into account, it can be socially optimal to implement an additional instrument encouraging the reduction of emissions, for instance a renewable energy subsidy. Our analysis has both a practical and a theoretical purpose. It aims at giving economic insight to policymakers in a context of increased uncertainty concerning the future stringency of the European Emission Trading Scheme. It also gives another rationale for the use of several instruments to cover the same emission sources, and shows the importance of accounting for corner solutions in the definition of the optimal policy mix. Highlights : - We develop an analytical and a numerical model of the EU energy and carbon markets. - We add uncertainty on energy demand and focus on instruments for emission reduction. - We analyze the economic implications of a risk that the CO2 price drops to zero. - We show that it can be socially optimal to add an instrument to the EU-ETS. |
| Date: | 2013–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00866440&r=reg |
| By: | Jean-Michel Glachant (ADIS - Analyse des Dynamiques Industrielles et Sociales - Département d'Economie - Université Paris XI - Paris Sud); Haikel Khalfallah (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : FRE3389 - Université Pierre-Mendès-France - Grenoble II); Yannick Perez (LdP - Loyola de Palacio Programme - European University Institute); Vincent Rious (E3S - Supélec Sciences des Systèmes - EA4454 - SUPELEC); Marcelo Saguan (Chercheur Indépendant - Aucune) |
| Abstract: | It is puzzling today to explain both the diversity and the rationale of regulators' practice vis-à-vis network monopolies. We argue that two fundamental characteristics should be considered when defining the most appropriate regulatory tools. First, it is the bounded endowment of regulators set by governments and legislators which determines their abilities (staff, budget, administrative powers) to implement any of the regulatory tools. Ranked from the easiest to the most demanding to implement, these various tools are: a- cost plus, b- price/revenue cap, c- output or performance-based regulation, d- menu of contracts and e- yardstick competition. Second, the regulators also have to take into account that the network monopolies perform multiple tasks with heterogeneous regulatory characteristics (in terms of controllability, ex ante predictability and ex post observability). These characteristics of tasks determine what type of regulatory tool is more likely to better regulate each task. The regulatory tools then perform well only when they are implemented for tasks that are controllable and predictable enough. It is the kind of observability of these tasks which determines the best incentive tool to implement. Lastly, conclusions for the regulation of networks are derived. A workable regulation of network relies on a reasonable alignment of the regulatory tools with the regulatory characteristics of tasks and the regulators resource endowment. |
| Keywords: | Incentive regulation ; bounded regulator ; regulatory endowment ; network tasks ; regulatory alignment |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00767872&r=reg |
| By: | Böckers, Veit; Haucap, Justus; Heimeshoff, Ulrich |
| Abstract: | This paper analyses the benefits of further market integration of European wholesale electricity markets. Major gains from trade are sill left unrealized due to (1) uncomplete market coupling of national wholesale markets, (2) isolated national regulation of capacity and reserve mechanisms (CRM) and (3) a lack of harmonization of national support schemes for renewable energies. -- |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:109&r=reg |
| By: | Oskar Lecuyer (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech); Ruben Bibas (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech) |
| Abstract: | In addition to the already present Climate and Energy package, the European Union (EU) plans to include a binding target to reduce energy consumption. We analyze the rationales the EU invokes to justify such an overlapping and develop a minimal common framework to study interactions arising from the combination of instruments reducing emissions, promoting renewable energy (RE) production and reducing energy demand through energy efficiency (EE) investments. We find that although all instruments tend to reduce GHG emissions and although a price on carbon tends also to give the right incentives for RE and EE, the combination of more than one instrument leads to significant antagonisms regarding major objectives of the policy package. The model allows to show in a single framework and to quantify the antagonistic effects of the joint promotion of RE and EE. We also show and quantify the effects of this joint promotion on ETS permit price, on wholesale market price and on energy production levels. |
| Date: | 2013–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00866439&r=reg |
| By: | Oskar Lecuyer (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech); Adrien Vogt-Schilb (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech) |
| Abstract: | Climate change mitigation requires to replace preexisting carbon-intensive capital with different types of cleaner capital. Coal power and inefficient thermal engines may be phased out by gas power and efficient thermal engines or by renewable power and electric vehicles. We derive the optimal timing and costs of investment in a low- and a zero-carbon technology, under an exogenous ceiling constraint on atmospheric pollution. Producing output from the low-carbon technology requires to extract an exhaustible resource. A general finding is that investment in the expensive zero-carbon technology should always be higher than, and can optimally start before, investment in the cheaper low-carbon technology. We then provide illustrative simulations calibrated with data from the European electricity sector. The optimal investment schedule involves building some gas capacity that will be left unused before it naturally depreciates, a process known as mothballing or early scrapping. Finally, the levelized cost of electricity (LCOE) is a misleading metric to assess investment in new capacities. Optimal LCOEs vary dramatically across technologies. Ranking technologies according to their LCOE would bring too little investment in renewable power, and too much in the intermediate gas power. |
| Date: | 2013–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00866442&r=reg |
| By: | Vincent Bertrand |
| Abstract: | European power producers have a major influence on the EU ETS, given that both their CO2 emissions and their EUA (European Union Allowance) allocations account for more than half of the total volumes of the scheme. Fuel switching is often considered as the main short-term abatement measure under the EU ETS. It consists in substituting combined cycle gas turbines (CCGTs) for hard-coal plants in power generation. Thereby coal plants run for shorter periods, and CO2 emissions are reduced. This paper provides a theoretical analysis of fuel switching, in a context where power plants involved are not equally efficient. We begin with some analyses which enable us to observe how differences in the efficiency of power plants impact the cost of fuel switching, and how this is related to the level of switching effort. Based on these preliminary analyses, we build the first partial equilibrium model taking into account the effect of differences in the efficiency of power plants involved in fuel switching. We also investigate the effect of the timing of fuel switching abatements, within the temporally defined environment of our dynamic partial equilibrium model. Results show that the gas price, uncontrolled CO2 emissions and the timing of abatement (through the time of occurrence of random shocks on uncontrolled emissions) act together on the carbon price, and on its relationship with fuel prices.. |
| Keywords: | Tradable Emission Allowances, Fuel Switching, EU ETS, Efficiency of power plants, Partial Equilibrium Modeling |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cec:wpaper:1309&r=reg |
| By: | Eric Borden; Wolf-Peter Schill |
| Abstract: | Recent developments in electricity markets such as the increased deployment of variable renewable generation have prompted renewed interest over the role of energy storage. While storage technologies can in principle provide various benefits for the functioning of an electrical grid, many energy storage technologies are in initial stages of development and demonstration. The role of public policy is thus vital for development and market integration of storage technology. We identify and discuss selected policy efforts by the United States of America and Germany with a focus on less-developed storage technologies. While research and demonstration of storage technologies has increased in both countries, we find that public funding is still small compared to overall energyrelated expenditures. Both countries use technology-push and market-pull approaches. Whereas the U.S. focuses on technologies which are useful to improve system stability, like batteries, capacitors, and flywheels, Germany has a stronger focus on bulk seasonal storage that may aid the integration of variable renewables, for example power to gas. We conclude that increased data-sharing and cooperation between the two governments and research institutions will help enhance the efficacy of both countries' publicly funded storage research. U.S. research institutions that link basic research with commercialization of technology, as well as developments in U.S. regulation of ancillary markets, may provide useful models for Germany. The U.S., on the other hand, may look to Germany's institutions as inspiration for its loan guarantee program. |
| Keywords: | Energy Storage, Technology-Push, Market-Pull, U.S., Germany |
| JEL: | Q38 Q42 Q48 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1328&r=reg |
| By: | Normann, Hans-Theo; Tan, Elaine S. |
| Abstract: | We analyze the effects of cartel policies on firm behavior using data from the German power-cable cartel. Antitrust authorities affected the cartel under two different legal regimes: penalizing the cartel in some years, and exempting it for ten years from the general cartel prohibition. While penalties did not reduce prices or profits, making collusion legal raised profits by at least 16% each year, compared to the time when the illegal cartel was not prosecuted. The threat of penalties was sufficient to reduce profit from collusion. The intended efficiency gains from rationalization, which was the justification for legalizing the cartel, did not materialize. -- |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:108&r=reg |
| By: | Horn, Henrik (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Few EU decisions have caused more international outcry than the extension of the EU Emissions Trading System (ETS) to apply to aviation. The directive was legally challenged by US airlines before a UK court, which referred the case to the European Court of Justice (ECJ) for a preliminary ruling concerning the compatibility of the directive with international law. This paper discusses the argumentation by the ECJ and the Advocate General from an economic perspective. Such an analysis is warranted in light of the fact that the contested measure is an economic regulation, the international laws that are invoked have clear economic objectives, and the ECJ judgment and the opinion by the Advocate General at least partly rely on economic concepts and mechanisms. An economic analysis also seems warranted from a legal point of view since the quality of the judgment and of the opinion presumably depend on the soundness of their economic reasoning. It is found that the argumentation by the legal authorities is highly questionable in important parts, when viewed from an economic perspective. |
| Keywords: | EJC decision on aviation; ETS; Border carbon adjustment |
| JEL: | K31 K32 L93 |
| Date: | 2013–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0980&r=reg |
| By: | Pudney, Stephen; Bryan, Mark; DelBono, Emilia |
| Abstract: | This study sets out the potential costs and benefits of a move to a licensed, taxed and regulated cannabis market in England and Wales. It identifies at least 17 sources of social cost/benefit and gives indicative estimates of annual net external benefit for 13 of them. We stress the important role of product regulation as a means of controlling the chemical properties of the cannabis product. Research in neuroscience has demonstrated the harmful effects of one cannabis constituent (THC) and the protective role of another (CBD). Given the strong upward trend in THC and downward trend in CBD in the illegal cannabis market, the possibility of product regulation is a potential advantage of a licensed and regulated system of supply. Three alternative scenarios are used, based on different assumptions about the responsiveness of demand to the policy change. We find that net benefits are likely to be positive and modest in size, except in the case of highly responsive demand (where, however, there is a great deal of uncertainty associated with the estimates). By far the largest effect is projected to be the net budgetary improvement for government, from new tax revenue and reduced policing and criminal justice costs. |
| Keywords: | cannabis, regulation, legalization |
| JEL: | H20 I18 K42 |
| Date: | 2013–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:50365&r=reg |