nep-reg New Economics Papers
on Regulation
Issue of 2014‒03‒15
four papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Design analysis mechanisms for carbon auction market through electricity market coupling By Mireille Bossy; Odile Pourtallier; Nadia Maïzi
  2. Redistribution Effects Resulting from Cross-Border Cooperation in Support for Renewable Energy By Unteutsch, Michaela
  3. Former Soviet Union Countries and European Union: Overcoming the Energy Efficiency Gap By Olga Podkorytova; Yulia Raskina
  4. A Theory of Contracts With Limited Enforcement By Martimort, David; Semenov, Aggey; Stole, Lars

  1. By: Mireille Bossy (INRIA Sophia Antipolis / INRIA Lorraine / IECN - TOSCA - INRIA - CNRS : UMR7502 - Université Henri Poincaré - Nancy I - Université Nancy II - Institut National Polytechnique de Lorraine (INPL)); Odile Pourtallier (INRIA Sophia Antipolis - COPRIN - INRIA - École des Ponts ParisTech (ENPC)); Nadia Maïzi (CMA - Centre de Mathématiques Appliquées - MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: In this paper, we analyze Nash equilibria between electricity producers selling their production on an electricity market and buying \co2 emission allowances on an auction carbon market. The producers' strategies integrate the coupling of the two markets via the cost functions of the electricity production. We set out a clear Nash equilibrium on the power market that can be used to compute equilibrium prices on both markets as well as the related electricity produced and \co2 emissions released.
    Date: 2014–03–01
  2. By: Unteutsch, Michaela (Energiewirtschaftliches Institut an der Universitaet zu Koeln)
    Abstract: It has been shown that international cooperation in achieving renewable energy targets, e.g., via a common tradable green certi ficate market, increases overall welfare. However, cooperation in the support of electricity from renewable energy sources also leads to regional price effects, from which some groups benefit while others lose. On a regional level, the introduction of cross-border cooperation in RES-E support generally has an opposite effect on support expenditures and wholesale electricity prices, as long as grid congestion between the diff erent regions exists. In this paper, a theoretical model is used to analyze under which conditions different groups benefi t or suff er from the introduction of cooperation. Findings of the analysis include that eff ects on consumers and total producers per country can only be clearly determined if no grid congestions between the countries exist. If bottlenecks in the transmission system exist, the relationship between the slopes of the renewable and the non-renewable marginal generation cost curves for electricity generation as well as the level of the RES-E target essentially determine whether these groups benefi t or lose from the introduction of green certi ficate trading. In contrast, system-wide welfare always increases once cooperation in RES-E support is introduced. Similarly, welfare on the country level always increases (compared to a situation without RES-E cooperation) if the countries are perfectly or not at all physically interconnected. In the case of congested interconnectors, each country always at least potentially benefi ts from the introduction of certi ficate trade, taking into account possible distributions of congestion rents between the countries.
    Keywords: Cooperation Mechanisms; Tradable Green Certificates; Welfare; Consumer Rent; Producer Profit
    JEL: F19 Q28 Q40 Q48
    Date: 2014–01–14
  3. By: Olga Podkorytova; Yulia Raskina
    Abstract: This paper evaluates convergence of energy intensity for the former USSR countries during 1995-2010. We divide these countries into three clubs and show convergence in income and in energy intensity for each club. We also demonstrate that rate of convergence is higher in countries with a low level of development.
    Keywords: Сlub convergence, energy intensity, former USSR
    Date: 2014–02
  4. By: Martimort, David; Semenov, Aggey; Stole, Lars
    Abstract: We present a Theory of Contracts under costly enforcement in the context of a dynamic relationship between an uninformed buyer and a seller who is privately informed on his persistent cost at the outset. Public enforcement relies on remedies for breach. Private enforcement comes from severing relationships. We first characterize aggregate enforcement constraints ensuring that trading partners do not breach contracts unduly. Whether a long-term contract is enforceable does not depend on the distribution of penalties for breach between the buyer and the seller. While under complete information, the optimal contract would remain stationary, non-stationarity might arise under asymmetric information. Enforcement constraints are time-dependent and easier to satisfy as time passes. Indeed, a high-cost seller may be tempted to trade high volumes at high prices at the beginning of the relationship before breaching the contract later on. Yet, such take-the-money-and-run strategy becomes less attractive as time passes and can be prevented with backloaded payments. The optimal contract thus goes through two different phases. First, quantities and prices increase at the inception of the relationship. Later on, the contract looks more stationary. The public and private sides of enforcement plays different roles in determining the length of the earlier phase of contracting. Long-run screening distortions encapsulate the quality of enforcement, offering de facto a link between the quality of the legal system and contractual performances.
    Keywords: Asymmetric information, enforcement, breach of contracts, dynamic contracts
    JEL: D82 D86
    Date: 2014–02–07

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