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on Regulation |
| By: | Steve Cicala |
| Abstract: | This paper evaluates changes in fuel procurement practices by coal- and gas-fired power plants in the United States following state-level legislation that ended cost-of-service regulation of electricity generation. I find that deregulated plants substantially reduce the price paid for coal (but not gas), and tend to employ less capital-intensive sulfur abatement techniques relative to matched plants that were not subject to any regulatory change. Deregulation also led to a shift toward more productive coal mines. I show how these results lend support to theories of asymmetric information, capital bias, and regulatory capture as important sources of regulatory distortion. |
| JEL: | D24 D72 D82 L11 L43 L51 L94 L98 Q4 Q48 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20109&r=reg |
| By: | Fischer, Carolyn (Resources for the Future); Newell, Richard G.; Preonas, Louis |
| Abstract: | Myriad policy measures aim to reduce greenhouse gas emissions from the electricity sector, promote generation from renewable sources, and encourage energy conservation. To what extent do innovation and energy efficiency (EE) market failures justify additional interventions when a carbon price is in place? We extend the model of Fischer and Newell (2008) with advanced and conventional renewable energy technologies and short and long-run EE investments. We incorporate both knowledge spillovers and imperfections in the demand for energy efficiency. We conclude that some technology policies, particularly correcting R&D market failures, can be useful complements to emissions pricing, but ambitious renewable targets or subsidies seem unlikely to enhance welfare when placed alongside sufficient emissions pricing. The desirability of stringent EE policies is highly sensitive to the degree of undervaluation of EE by consumers, which also has implications for policies that tend to lower electricity prices. Even with multiple market failures, emissions pricing remains the single most cost-effective option for reducing emissions. Classification-JEL: Q42, Q52, Q55, Q58 |
| Keywords: | climate change, cap-and-trade, renewable energy, portfolio standards, subsidies, spillovers, energy efficiency, electricity |
| Date: | 2013–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-13-20&r=reg |
| By: | Burtraw, Dallas (Resources for the Future); Linn, Joshua (Resources for the Future); Palmer, Karen (Resources for the Future); Paul, Anthony (Resources for the Future) |
| Abstract: | US climate policy is unfolding under the Clean Air Act. Mobile source and construction permitting regulations are in place. Most important, the US Environmental Protection Agency (EPA) and the states will determine the form and stringency of the regulations for existing power plants. It is widely believed that flexible approaches could be suggested in EPA guidelines or proposed by states. Various approaches would create an implicit price on emitting greenhouse gases and create valuable assets that would be distributed differently among electricity producers, consumers, and the government. We compare a tradable performance standard with three variations on cap-and-trade policies that would distribute the asset value in different ways. Keeping the value within the electricity sector by distributing it to fossil-fueled producers or consumers or spending on energy efficiency has smaller effects on average electricity prices than a revenue-raising policy. These approaches impose greater social cost, but comparable net benefits in the sector. Classification-JEL: Q54, Q58 |
| Keywords: | climate policy, efficiency, equity, Clean Air Act, coal, compliance flexibility, regulation |
| Date: | 2014–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-14-01&r=reg |
| By: | Paul, Anthony (Resources for the Future); Beasley, Blair; Palmer, Karen (Resources for the Future) |
| Abstract: | Concerns about budget deficits, tax reform, and climate change are fueling discussions about taxing carbon emissions to generate revenue and reduce greenhouse gas emissions. Imposing a carbon tax on electricity production based on the social cost of carbon (SCC) could generate between $21 and $82 billion in revenues in 2020 and would have important effects on electricity markets. The sources of emissions reductions in the sector depend on the level of the tax. A carbon tax based on lower SCC estimates reduces emissions by reducing demand and through the substitution of gas for coal, whereas taxes based on higher SCC estimates induce switching to wind and nuclear generation. The slow rate of growth of the SCC estimates means that any SCC-based carbon tax trajectory provides weaker long-run incentives for expanded renewable and nuclear generation than a cap-and-trade program that achieves an equivalent level of cumulative carbon dioxide emissions reductions. Taxing carbon at the SCC is welfare enhancing, but the SCC may not be the optimal tax rate. Classification-JEL: Q58, H23, H77 |
| Keywords: | carbon tax, cap and trade, social cost of carbon, electricity, energy, climate |
| Date: | 2013–11–21 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-13-23-rev&r=reg |
| By: | Dorothea GREILING (University Johannes Kepler University Linz (Austria)) |
| Abstract: | In the last two decades there has been a strong drive by the EU-Regulation of liberalizing the service delivery of Services of General Economic Interest. Public enterprises are under pressure to be more market-orientated. In Germany there has been a long tradition that public enterprises are seen as an instrument by the public owners to achieve a variety of economic and non-economic policy objectives. This creates an inherent tension between market- and public service orientation. Against this background an in-depth case study was carried out in other to investigate how one of the biggest local public enterprises reacted to these pressures. The SWK group is a positive example where market orientation and public service provision goes hand in hand since the founding days. The existence of the SWK group was never questioned by the public owner who regards it as its entrepreneurial arm for providing local infrastructure services. |
| Keywords: | Case study, Germany, governance, local public enterprises, regulation, Services of General Economic Interest, performance |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:crc:wpaper:1304&r=reg |
| By: | Mukherjee, Sacchidananda (National Institute of Public Finance and Policy); Rao, R. Kavita (National Institute of Public Finance and Policy) |
| Abstract: | The study analyses the impact of keeping crude petroleum, natural gas, motor spirit (gasoline/ petrol), high speed diesel (diesel), aviation turbine fuel (ATF) and electricity out of the Value Added Tax (VAT) scheme. Specifically, the study finds that keeping these items out of the input tax credit mechanism (either partially or fully) would result in cascading. Through an input-output framework, this study proposes some alternatives to the proposed design of GST and assesses the implications for cascading and prices. It captures the degree of cascading across 48 sectors under different scenarios and explores alternative policy options to phase out under-recoveries of oil market companies on account of sales of diesel and petrol under the administered pricing mechanism. |
| Keywords: | Goods and services tax, Value added tax, Tax cascading, Tax incidence analysis, Ad valorem tax, Input-output analysis, Revenue neutral rates, Taxation of petroleum products, India |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:npf:wpaper:14/136&r=reg |
| By: | Goulder, Lawrence H. (Resources for the Future); Hafstead, Marc A.C. (Resources for the Future); Williams, Roberton C. (Resources for the Future) |
| Abstract: | Economists have tended to view emissions pricing (e.g., cap and trade or a carbon tax) as the most cost-effective approach to reducing greenhouse gas emissions. This paper offers a different view. Employing analytical and numerically solved general equilibrium models, the paper indicates plausible conditions under which a more conventional form of regulation—namely, the use of a clean energy standard (CES)—is more cost-effective. The models reveal that in a realistic economy with prior taxes on factors of production, the CES distorts factor markets less because it is a smaller implicit tax on factors. This advantage more than offsets the disadvantages of the CES when relatively minor reductions in emissions are called for. Numerical simulations indicate that the cost-effectiveness of the CES is sensitive to what is deemed “clean” electricity. To achieve maximal cost-effectiveness, the CES must offer significant credit to electricity generated from natural gas. Classification-JEL: Q58, Q54, H23 |
| Keywords: | clean energy standard, intensity standard, emissions pricing, climate |
| Date: | 2014–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-14-02&r=reg |
| By: | Muehlenbachs, Lucija (Resources for the Future); Spiller, Elisheba; Timmins, Christopher |
| Abstract: | Using data from Pennsylvania and New York and an array of empirical techniques to control for confounding factors, we recover hedonic estimates of property value impacts from shale gas development that vary with geographic scale, water source, well productivity, and visibility. Results indicate large negative impacts on nearby groundwater-dependent homes, while piped-water-dependent homes exhibit smaller positive impacts, suggesting benefits from lease payments. At a broader geographic scale, we find that new wellbores increase property values, but these effects diminish over time. Undrilled permits cause property values to decrease. Results have implications for the debate over regulation of shale gas development.Classification-JEL: Q32, Q33, Q50, Q53 |
| Keywords: | shale gas, groundwater, property values, hedonic models, nearest neighbor matching, differences-in-differences, triple differencesCreation-Date: 2013-12-09 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-13-39-rev&r=reg |
| By: | Jan A. Kregel; Mario Tonveronachi (Tallinn University of Technology, Estonia) |
| Abstract: | The financial system is a private-public partnership coming from government ceding the right to produce means of payment with the related permission on leveraged lending services, against the acceptance of rules designed to ensure stability for both individual institutions and the financial system. The experience shows that market-based regulation does not produce the wanted results, while rules-based and principle-based regulatory systems are prone to regulatory avoidance and capture, especially with complex regulatory schemes. While the reaction to the recent crisis has prompted a wide range of financial reforms, in a duel to match complexity with complexity, the previous approach based on leaving market forces to mould the financial structure with few if any constraints maintained. The paper shows that this approach adopts faulty or casuistic policy implications derived from both the laissez faire and the second-best versions of mainstream economic theory. However, some of its basic features, such as regulating institutions and products and not functions, and as promoting the international level playing field, are not coherent with its reputed theoretical foundations. Furthermore, the absence of strong principles and the impossibility to derive conclusive quantitative proposals from cost-benefit evaluations leaves an unacceptably wide area of discretion for experimentation with trial and error processes, easily leading to weak or distorted regulation. The difficulties experienced within this framework to deal with problems such as those posed by systemic institutions, shadow banking, weak rules and supervision, distorted risk evaluation, high compliance costs, etc. has convinced some observers that a ‘revolution’ in economic thinking and policy is required. Following Minsky, the conclusions review a heterodox approach to financial fragility and regulation. Characterising banking in terms of liquidity creation through acceptance, and distinguishing it from the production of liquidity by other financial institutions, it concludes that financial organisations should be regulated according to their function in providing liquidity of different types to the financial system. |
| Keywords: | Financial regulation, financial supervision, financial fragility, Hyman Minsky |
| JEL: | G01 G21 G24 G28 G32 |
| Date: | 2014–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:fes:wpaper:wpaper29&r=reg |
| By: | Tolga Umut Kuzubas; Burak Saltoglu; Can Sever |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:bou:wpaper:2014/01&r=reg |
| By: | Gisella ARAGÓN (Universidad del Pacífico, Perú); José Luis BONIFAZ (Faculty of Economics and Finance, Universidad del Pacífico, Perú) |
| Abstract: | Public services in all countries are related to the basic needs that people should satisfy in order to warranty a worthy quality of life. The water and sanitation services provision is one of these services. Through this study, the case of water and sanitation provision in Peru will be analyzed. Data evidences that by 2004, the 71% of Peruvian population had access to water services, while the 63% of Peruvian population had access to sanitation services. Then, it can be inferred that the performance of the provider enterprises of water and sanitation services and the tariffs scheme has not been good enough. In order to understand the problem beyond the provision of water and sanitation services in Peru, it is necessary to investigate the political economy of Peruvian water and sanitation sector and its tariffication scheme. |
| Keywords: | Incidence, Business Taxes and Subsidies, Public Goods, Infrastructures, Economics of Regulation, Government Programs, Provision and Effects of Welfare Programs, Economic Development, Human Resources, Human Development, Income Distribution, Migration |
| JEL: | H22 H25 H41 H54 L51 I38 O15 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:crc:wpaper:1306&r=reg |
| By: | Olivier CRESPI REGHIZZI (Centre International de Recherche sur l’Environnement et le Développement (CIRED), AgroParisTech – Paris; Centro di Economia Regionale, dei Trasporti e del Turismo (CERTET), Università Commerciale Luigi Bocconi – Milano) |
| Abstract: | This paper is focused on a case study on Milan’s water and sanitation service (MIWSS) in the 2003-2013 time frame. Since 2003, MI-WSS has been provided by Metropolitana Milanese SpA (MM) which is a joint stock company fully owned by Milan’s municipality. MM not only operates the water service but also civil engineering services mainly in the transport sector. A historical approach is adopted as a background, to tackle the evolution from direct municipal provision to an autonomous and corporatized WSS and give more depth to the case study. Commitment to public service mission and general interests’ goals is discussed adopting a historical approach too to appreciate the switch from full direct provision to corporatized provision. Limiting the analysis to MM only would be too restrictive and we propose instead to adopt a wider perimeter which includes all the stakeholders of Milan’s WSS. Such an enlarged perimeter of analysis is particularly relevant to discuss regulation and governance issues. In the water sector public service mission includes many goals which should be appreciated adopting a long run and intergenerational perspective and expressed in terms of sustainability. Applying sustainability criteria to Milan’s WSS raises more than one question. |
| Keywords: | Water supply and sewerage, Milan, corporatization, regulation, public service |
| JEL: | L95 H54 H72 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:crc:wpaper:1308&r=reg |
| By: | Hana Dzmuranova (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Petr Teply (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic and Department of Banking and Insurance Faculty of Finance and Accounting, University of Economics University of Economics, Prague) |
| Abstract: | This paper deals with the risk management of savings accounts. Savings accounts are non-maturing accounts bearing a relatively attractive rate of return and two embedded options: a customer’s option to withdraw money at any time and a bank’s option to set the deposit as it wishes. The risk management of saving accounts remains a big challenge for banks and simultaneously raises serious concerns by some regulators. In this paper, we focus on the interest rate risk management of savings accounts. By constructing the replicating portfolio and simulating six scenarios for the market rate and client rates, we show that under the severest scenario, some banks in the Czech Republic might face a capital shortage up to 22% in next two years if market rates start to increase dramatically. We conclude that savings accounts are risky instruments that cannot be hedged by standard risk mitigation techniques. Since savings accounts in the Czech Republic are not subject to any special regulation yet, we propose imposing stricter regulation and supervision (the Belgium framework might be an inspiring model to consider). |
| Keywords: | demand deposits, interest rate risk, replicating portfolio, risk management, savings accounts, simulations |
| JEL: | C15 G21 G11 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2014_09&r=reg |