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on Regulation |
| By: | Marc Bourreau (Telecom ParisTech and CREST-LEI); Frago Kourandi (Athens University of Economics and Business); Tommaso Valletti (University of Rome Tor Vergata and Imperial College London) |
| Abstract: | We propose a two-sided model with two competing Internet platforms, and a continuum of Content Providers (CPs). We study the effect of a net neutrality regulation on capacity investments in the market for Internet access, and on innovation in the market for content. Under the alternative discriminatory regime, platforms charge a priority fee to those CPs which are willing to deliver their content on a fast lane. We find that under discrimination investments in broadband capacity and content innovation are both higher than under net neutrality. Total welfare increases, though the discriminatory regime is not always beneficial to the platforms as it can intensify competition for subscribers. As platforms have a unilateral incentive to switch to the discriminatory regime, a prisoner's dilemma can arise. We also consider the possibility of sabotage, and show that it can only emerge, with adverse welfare effects, under discrimination. |
| Keywords: | Net neutrality; Two-sided markets; Platform competition; Investment; Innovation. |
| JEL: | L13 L51 L52 L96 |
| Date: | 2014–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:307&r=reg |
| By: | Shawkat Hammoudeh; Duc Khuong Nguyen; Ricardo M. Sousa |
| Abstract: | This paper analyzes the short-term dynamics of the prices of CO2 emissions, using the vector autoregression (VAR) and the vector error-correction Models (VECM). The data are monthly for the prices of oil, coal, natural gas, electricity and carbon emission allowances. The results show that: (i) a positive shock to the crude oil prices has a negative effect on the CO2 prices; (ii) an unexpected increase in the natural gas prices raises the price of CO2 emissions; (iii) a positive shock to the prices of the fuel of choice, coal, has virtually no significant impact on the CO2 prices; (iv) there is a clear positive effect of the coal prices on the CO2 prices when the electricity prices are excluded from the VAR system; and (v) a positive shock to the electricity prices reduces the price of the CO2 allowances. We also find that the energy price shocks have a persistent impact on the CO2 prices, with the largest effect occurring 6 months after the shock. The effect is particularly strong in the case of the natural gas price shocks. Additionally, we estimate that it takes between 7.3 and 9.6 months to halve the gap between the actual and the equilibrium prices of the CO2 allowances, i.e., to erase any price over- or under-valuations after a shock strikes. Finally, the empirical findings suggest an important degree of substitution between the three primary sources of energy (i.e., crude oil, natural gas and coal), particularly, when electricity prices are excluded from the VAR system. |
| Keywords: | CO2 emissions prices, crude oil, natural gas, coal, electricity |
| JEL: | Q47 |
| Date: | 2014–01–06 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:2014-081&r=reg |
| By: | Yuanjing LI |
| Abstract: | The pro-competitive effects of forward contracts in electricity market cannot be regarded alone without examining the market structure. In this paper, we show that under retail competition, spot market demand uncertainty and risk aversion, partially or fully integrated electricity generators and retailers have less incentives to be involved in trading electricity under forward contracts. Therefore, the effect of market power mitigation of forward contracts is countered by this vertical relationship between retailers and generators since it provides a natural hedging device as a substitute of forward contracts to the retailers. Both analytic framework and numerical simulation suggest that the optimal quantity of forward sales decreases and spot price increases with the degree of vertical control of retailers over generators' assets. We thus conclude that the retailers' ownership over generators' profits could give rise to generators exercising market power in electricity spot market. |
| Keywords: | Electricity, forward contracts, vertical integration |
| Date: | 2013–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:2013-018&r=reg |
| By: | Shawkat Hammoudeh; Amine Lahiani; Duc Khuong Nguyen; Ricardo M. Sousa |
| Abstract: | We use the recently developed nonlinear autoregressive distributed lags (NARDL) model to examine the pass-through of changes in crude oil prices, natural gas prices, coal prices and electricity prices to the CO2 emission allowance prices. This approach allows one to simultaneously test the short- and long-run nonlinearities through the positive and negative partial sum decompositions of the predetermined explanatory variables. It also offers the possibility to quantify the respective responses of the CO2 emission prices to positive and negative shocks to the prices of their determinants from the asymmetric dynamic multipliers. We find that: (i) the crude oil prices have a long-run negative and asymmetric effect on the CO2 allowance prices; (ii) the falls in the coal prices have a stronger impact on the carbon prices in the short-run than the increases; (iii) the natural gas prices and electricity prices have a symmetric effect on the carbon prices, but this effect is negative for the former and positive for the latter. Policy implications are provided. |
| Keywords: | CO2 allowance price, energy prices, NARDL model, asymmetric passthrough |
| JEL: | Q47 |
| Date: | 2014–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:2014-082&r=reg |
| By: | Jeffrey Clemens |
| Abstract: | In the early 1990s, several U.S. states enacted community rating regulations to equalize the health insurance premiums paid by the healthy and the sick. Consistent with severe adverse selection pressures, their private coverage rates fell by around 8 percentage points more than rates in comparable markets over subsequent years. By the early 2000s, following substantial public insurance expansions, coverage rates in several of these states had improved significantly. As theory predicts, recoveries were largest where public coverage expanded disproportionately for high cost populations. The analysis highlights that the incidence of public insurance and community rating regulations are tightly intertwined. |
| JEL: | H51 H53 I13 I18 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19904&r=reg |
| By: | Ghosal, Vivek (Georgia Institute of Technology (Atlanta), European Business School (Wiesbaden), and CESifo (Munich).); Stephan , Andreas (CESIS Stockholm and Jönköping International Business School); Weiss, Jan (Jönköping International Business School) |
| Abstract: | Using a unique plant-level dataset we examine green productivity growth in Sweden’s heavily regulated pulp and paper industry, which has historically been a significant contributor to air and water pollution. Our exercise is interesting as Sweden has a unique regulatory structure where plants have to comply with national environmental regulatory standards and enforcement, along with decentralised plant-specific regulations. In our analysis, we use the sequential Malmquist-Luenberger productivity index which accounts for air and water pollutants as undesirable outputs. Some of our key findings are: (1) regulation has stimulated technical change related to pollution control, and has induced plants to catch up with the best-practice technology frontier with regard to effluent abatement; (2) large plants are more heavily regulated than small plants; (3) plants in environmentally less sensitive areas or those with local importance as employer face relatively lenient regulatory constraints; (4) environmental regulations trigger localized knowledge spillovers between nearby plants, boosting their green TFP growth. |
| Keywords: | TFP; DEA; Sequential Malmquist-Luenberger productivity index; pulp and paper industry; pollution; environmental regulations; enforcement; plant-specific regulation; productivity; Porter hypothesis |
| JEL: | D24 L51 L60 Q52 Q53 Q58 |
| Date: | 2014–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0342&r=reg |
| By: | Bernardo, Giovanni; D'Alessandro, Simone |
| Abstract: | This paper analyses different policies that may promote the transition towards a low-carbon economy. We present a dynamic simulation model where three different strategies are identified: improvements in energy efficiency, the development of the renewable energy sector, and carbon capture and storage. Our aim is to evaluate the dynamics that the implementation of these strategies may produce in the economy, looking at different performance indicators, such as the GDP growth rate, unemployment, labour share, carbon emissions, and renewable energy production. Scenario analysis shows that a number of tradeoffs between social, economic and environmental indicators emerge. Such tradeoffs undermine an `objective' definition of sustainability. |
| Keywords: | sustainability, energy transition, system dynamics, scenario analysis. |
| JEL: | C63 E2 Q01 Q43 |
| Date: | 2014–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:53746&r=reg |