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on Regulation |
| By: | Kotowski, Maciej H. (Harvard University); Weisbach, David A. (University of Chicago); Zeckhauser, Richard J. (Harvard University) |
| Abstract: | A broad array of law enforcement strategies, from income tax to bank regulation, involve self-reporting by regulated agents and auditing of some fraction of the reports by the regulating bureau. Standard models of self-reporting strategies assume that although bureaus only have estimates of the of an agent's type, agents know the ability of bureaus to detect their misreports. We relax this assumption, and posit that agents only have an estimate of the auditing capabilities of bureaus. Enriching the model to allow two-sided private information changes the behavior of bureaus. A bureau that is weak at auditing, may wish to mimic a bureau that is strong. Strong bureaus may be able to signal their capabilities, but at a cost. We explore the pooling, separating, and semi-separating equilibria that result, and the policy implications. Important possible outcomes are that a cap on penalties increases compliance, audit hit rates are not informative of the quality of bureau behavior, and by mimicking strong bureaus even weak bureaus can induce compliance. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp2013-026&r=reg |
| By: | Johannes Gerd Becker (ZHAW, Switzerland); Hans Gersbach (ETH Zurich, Switzerland) |
| Abstract: | We consider an innitely repeated reappointment game in a principal- agent relationship. Typical examples are voter-politician or government- public servant relationships. The agent chooses costly effort and enjoys being in office until he is deselected. The principal observes a noisy signal of the agent's effort and decides whether to reappoint the agent or not. We analyse the stationary Markovian equilibria of this game and examine the consequences of threshold contracts, which forbid reappointment if the principal's utility is too low. We identify the circumstances under which such threshold contracts are welfare-improving or beneficial for the principal. |
| Keywords: | principal-agent model; repeated game; reappointment; stationary Markovian strategies; threshold strategies; threshold contracts, asymmetric information; commitment. |
| JEL: | C83 D82 D86 H11 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:13-182&r=reg |
| By: | Stephan Spiecker (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen) |
| Abstract: | The ongoing transformation of the European energy system comes along with new challenges, notably increasing amounts of power generation from intermittent sources like wind and solar. How current objectives for emission reduction can be reached in the future and what the future power system will look like is, however, not fully clear. In particular, power plant investments in the long run and power plant dispatch in the short run are subject to considerable uncertainty. Therefore an approach is presented which allows electricity market development to be assessed in the presence of stochastic power feed-in and endogenous investments in power plants and renewable energies. To illustrate the range of possible future developments, five scenarios for the European electricity system up to 2050 are investigated. Both generation investments and dispatch as well as utilization of transmission lines are optimized for these scenarios and additional sensitivity analyses are carried out. |
| Keywords: | integration of renewable energies, stochastic optimization, scenario analysis |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:dui:wpaper:1305&r=reg |
| By: | Duarte Brito (Universidade Nova de Lisboa and CEFAGE-UE); Pedro Pereira (Autoridade da Concorrência and CEFAGE-UE); João Vareda (CEFAGE-UE) |
| Abstract: | We analyze the impact of network neutrality regulation on: (i) competition between CPs, and on (ii) ISPs. incentives to invest. We consider both competition between ISPs and between CPs and show that, if ISPs can o¤er network services of different quality to CPs, they prefer to sell the highest quality network services to the CP that collects the highest advertising revenues. We further show that the impact of network neutrality regulation on the investment in the quality of network services is potentially ambiguous and depends on: (i) whether ISPs are symmetric, and (ii) the ISPs.ability to assign network.s capacity to CPs. If ISPs are symmetric and have full discretion on how to allocate the level of quality of network services among CPs, investment and welfare are higher under the discriminatory regime. |
| Keywords: | Network Neutrality; Competition; Investment. |
| JEL: | L43 L51 L96 L98 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cfe:wpcefa:2013_19&r=reg |
| By: | Francesco Bripi (Bank of Italy) |
| Abstract: | This paper studies the effects of differences in local administrative burdens in Italy in the years preceding a major reform that sped up firm registration procedures. Combining regulatory data from a survey on Italian provinces before the reform (costs and time to start a business) with industry-level entry rates of limited liability firms, I explore the effects of regulatory barriers on entry across industries with different natural propensities to enter the market. Using different specifications the estimates show that lengthier and, to some extent, more costly procedures reduced the entry rate of limited liability firms in sectors with naturally high entry rates. These results also hold when I include measures of local financial development and of efficiency of bankruptcy procedures. Overall, the analysis confirms the view that administrative burdens on new start-ups matter for business creation. |
| Keywords: | entry regulation, entrepreneurship, doing business |
| JEL: | G18 G38 L51 M13 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_932_13&r=reg |
| By: | Füss, Roland; Mahringer, Steffen; Prokopczuk, Marcel |
| Keywords: | Electricity Futures, Fundamental Model, Derivatives Pricing, Forward-looking Information, Enlargement of Filtrations |
| JEL: | G12 G13 Q4 Q41 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:usg:sfwpfi:2013:17&r=reg |
| By: | Fuchs, William (University of CA, Berkeley); Skrzypacz, Andrzej (Stanford University) |
| Abstract: | We study a dynamic market with asymmetric information that creates the lemons problem. We compare efficiency of the market under different assumptions about the timing of trade. We identify positive and negative aspects of dynamic trading, describe the optimal market design under regularity conditions and show that continuous-time trading can be always improved upon. |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:2133&r=reg |
| By: | Felix Richter; Malte Steenbeck; Markus Wilhelm |
| Abstract: | Major nuclear accidents as recently in Fukushima set nuclear power plant security at the top of the public agenda. Using data of the German Socio-Economic Panel we analyze the effects of the Fukushima accident and a subsequent government decision on nuclear power phase-out on several measures of subjective perception in Germany. In the light of current political debates about the strategic orientation of this energy turnaround, such an analysis is of particular interest since non-pecuniary gains in measures of subjective perception might provide further aspects to be taken into consideration when evaluating the economic costs of the policy. We find that the Fukushima accident increases the probability to report greater worries about the environment. Furthermore, we find evidence for a decrease in the probability to be very worried about the security of nuclear power plants as well as for an increase in reported levels of subjective well-being following the government's resolution on nuclear phase-out. Finally we find that the probabilities of reporting very high concerns are related to the distance between the respondents' place of residence and the nearest nuclear power station. |
| Keywords: | Fukushima, nuclear accident, nuclear energy, nuclear phase-out, environment, subjective perception |
| JEL: | I3 N7 Q4 R1 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp590&r=reg |
| By: | Keith M Marzilli Ericson; Amanda Starc |
| Abstract: | Standardization of complex products is touted as improving consumer decisions and intensifying price competition, but evidence on standardization is limited. We examine a natural experiment: the standardization of health insurance plans on the Massachusetts Health Insurance Exchange. Pre-standardization, firms had wide latitude to design plans. A regulatory change then required firms to standardize the cost-sharing parameters of plans and offer seven defined options; plans remained differentiated on network, brand, and price. Standardization led consumers on the HIX to choose more generous health insurance plans and led to substantial shifts in brands' market shares. We decompose the sources of this shift into three effects: price, product availability, and valuation. A discrete choice model shows that standardization changed the weights consumers attach to plan attributes (a valuation effect), increasing the salience of tier. The availability effect explains the bulk of the brand shifts. Standardization increased consumer welfare in our models, but firms captured some of the surplus by reoptimizing premiums. We use hypothetical choice experiments to replicate the effect of standardization and conduct alternative counterfactuals. |
| JEL: | D14 D80 H31 I11 L15 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19527&r=reg |
| By: | Moez KILANI; Stefan PROOST; Saskia VAN DER LOO |
| Abstract: | This paper explores reforms of pricing of private and public transport in Paris. Paris has used a policy of very low public transport prices and no road pricing. The Paris transport network is represented as a stylized concentric city with the choice between car, rapid rail, metro and busses as well as two income classes and different transport motives. The model is used to test what are the efficiency gains of introducing road pricing and of increasing public transit prices in the peak. Are both reforms re-enforcing each other or are they largely substitutes? We find that a zonal pricing scheme for the center of Paris combined with higher public transport fares in the peak perform best. The benefits of an overall capacity extension of public transport supply are much lower than the benefits of pricing reforms and could very well not pass the cost benefit test. |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces13.18&r=reg |
| By: | Coria, Jessica (Department of Economics, School of Business, Economics and Law, Göteborg University); Bonilla, Jorge (Department of Economics, School of Business, Economics and Law, Göteborg University); Grundström, Maria (Dept of Biological and Environmental Sciences); Pleijel, Håkan (Dept of Biological and Environmental Sciences) |
| Abstract: | In this paper we investigate the effects of the temporal variation of pollution dispersion, traffic flows and vehicular emissions on pollution concentration and illustrate the need for temporally differentiated road pricing through an application to the case of the congestion charge in Stockholm, Sweden. By accounting explicitly for the role of pollution dispersion on optimal road pricing, we allow for a more comprehensive view of the economy-ecology interactions at stake, showing that price differentiation is an optimal response to the physical environment. Most congestion charges in place incorporate price bans to mitigate congestion. Our analysis indicates that, to ensure compliance with air quality standards, such price variations should also be a response to limited pollution dispersion. |
| Keywords: | air pollution; road transportation; road pricing; assimilative capacity |
| JEL: | L91 Q53 R48 |
| Date: | 2013–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0572&r=reg |
| By: | Moore, Alexander; Straub, Stephane; Dethier, Jean-Jacques |
| Abstract: | The paper examines the capital structure of regulated infrastructure firms. The authors develop a model showing that leverage, the ratio of liabilities to assets, is lower under high-powered regulation and that firms operating under high-powered regulation make proportionally larger reductions in leverage when the cost of debt increases. They test the predictions of the model using an original panel dataset of 124 transport concessions in Brazil, Chile, Colombia and Peru over 1992-2011, finding broad support for our predictions. |
| Keywords: | Debt Markets,Emerging Markets,Bankruptcy and Resolution of Financial Distress,Banks&Banking Reform,Economic Theory&Research |
| Date: | 2013–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6646&r=reg |
| By: | Christoph Bohringer; Jared Carbone (University of Calgary); Thomas F. Rutherford |
| Abstract: | Unilateral carbon policies are inefficient due to the fact that they generally involve emission reductions in countries with high marginal abatement costs and because they are subject to carbon leakage. In this paper, we ask whether the use of carbon tariffs—tariffs on the carbon embodied in imported goods—might lower the cost of achieving a given reduction in world emissions. Specifically, we explore the role tariffs might play as an inducement to unregulated countries adopting emission controls of their own. We use an applied general equilibrium model to generate the payoffs of a policy game. In the game, a coalition of countries regulates its own emissions and chooses whether or not to employ carbon tariffs against unregulated countries. Unregulated countries may respond by adopting emission regulations of their own, retaliating against the carbon tariffs by engaging in a trade war, or by pursuing no policy at all. In the unique Nash equilibrium produced by this game, the use of carbon tariffs by coalition countries is credible. China and Russia respond by adopting binding abatement targets to avoid being subjected to them. Other unregulated countries retaliate. Cooperation by China and Russia lowers the global welfare cost of achieving a 10% reduction in global emissions by half relative to the case where coalition countries undertake all of this abatement on their own. |
| Date: | 2013–10–11 |
| URL: | http://d.repec.org/n?u=RePEc:clg:wpaper:2013-25&r=reg |