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on Regulation |
| By: | Carolyn Fischer (Resources for the Future, Washington DC, Gothenburg University and CESifo Research Network, München); Richard G. Newell (Duke University and National Bureau of Economic Research, Cambridge MA); Louis Preonas (Resources for the Future, Washington DC and University of California, Berkeley) |
| 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 |
| Keywords: | Climate Change, Cap-and-Trade, Renewable Energy, Portfolio Standards, Subsidies, Spillovers, Energy Efficiency, Electricity |
| JEL: | Q42 Q52 Q55 Q58 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2014.67&r=reg |
| By: | Elise Coudin (CREST); Anne Pla (DREES); Anne-Laure Samson (Université Paris Dauphine) |
| Abstract: | This paper uses a French reform to evaluate the impacts of price regulation on general practitioners (GP) care provision, fees, and income. This reform has restricted, since 1990, the conditions self-employed GPs have to fulfill to be allowed to over-bill. We exploit 2005 and 2008 Public Health insurance administrative data on GPs activity and fees. We use regression discontinuity techniques in a fuzzy design to estimate causal impacts for GPs who set up practice in 1990 and were constrained to charge regulated prices. Our results suggest that GPs react to income effects. Under price regulation, facing prices lower of 42%, GPs provide 50% of more care than if they could overbill. Male GPs react more than female GPs, which leads to opposite effects on their labor income. GPs are more accessible to patients but may also induce demand. They reduce aside salaried activities, use more lump-sum payment schemes, and occupy more often gate-keeper positions. A complementary analysis at dates closer to the reform suggests that these figures may underestimate the short-term effects of price regulation |
| Keywords: | extra-billings, fee-for-service, GPs’ activity, causal evaluation, regression discontinuity |
| JEL: | I11 C21 H51 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:crs:wpaper:2014-14&r=reg |
| By: | Marianna O'Gorman (Centre for Climate Economics and Policy, Crawford School of Public Policy, The Australian National University); Frank Jotzo (Crawford School of Public Policy, The Australian National University) |
| Abstract: | Australia's carbon price has been in operation for two years. The electricity sector accounts for the majority of emissions covered under the scheme. This paper examines the impact of the carbon price on the electricity sector between 1 July 2012 and 30 June 2014, focusing on the National Electricity Market (NEM). Over this period, electricity demand in the NEM declined by 3.8 per cent, the emissions intensity of electricity supply by 4.6 per cent, and overall emissions by 8.2 per cent, compared to the two-year period before the carbon price. We detail observable changes in power demand and supply mix, and estimate the quantitative effect of the effect of the carbon price. We estimate that the carbon price led to an average 10 per cent increase in nominal retail household electricity prices, an average 15 per cent increase in industrial electricity prices and a 59 per cent increase in wholesale (spot) electricity prices. It is likely that in response, households, businesses and the industrial sector reduced their electricity use. We estimate the demand reduction attributable to the carbon price at 2.5 to 4.2 TWh per year, about 1.3 to 2.3 per cent of total electricity demand in the NEM. The carbon price markedly changed relative costs between different types of power plants. Emissions-intensive brown coal and black coal generators reduced output and 4GW of emissions-intensive generation capacity was taken offline. We estimate that these shifts in the supply mix resulted in a 16 to 28kg CO2/MWh reduction in the emissions intensity of power supply in the NEM, a reduction between 1.8 and 3.3 per cent. The combined impact attributable to the carbon price is estimated as a reduction of between 5 and 8 million tonnes of CO2 emissions (3.2 to 5 per cent) in 2012/13 and between 6 and 9 million tonnes (3.5 to 5.6 per cent) in 2013/14, and between 11 and 17 million tonnes cumulatively. There are fundamental difficulties in attributing observed changes in demand and supply to specific causes, especially over the short term, and in this light we use conservative parameters in the estimation of the effect of the carbon price. We conclude that the carbon price has worked as expected in terms of its short-term impacts. However, its effect on investment in power generation assets has probably been limited, because of policy uncertainty about the continuation of the carbon pricing mechanism. For emissions pricing to have its full effect, a stable, long-term policy framework is needed. |
| Keywords: | emissions pricing, Australia, electricity supply and demand, ex-post evaluation |
| JEL: | Q58 Q48 Q41 Q28 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:een:ccepwp:1411&r=reg |
| By: | Jonas Egerer; Wolf-Peter Schill |
| Abstract: | We analyze distinctive investment scenarios for the integration of fluctuating renewables in the German power system. Using a combined model for dispatch, transmission, and investment, three different investment options are considered, including gas-fired power plants, pumped hydro storage, and transmission lines. We find that geographically optimized power plant investments dominate in the reference scenarios for 2024 and 2034. In scenarios with decreasedrenewable curtailment, storage and transmission requirements significantly increase. In an alternative scenario with larger investments into storage, system costs are only slightly higher compared to the reference; thus, considering potential system values of flexible pumped hydro storage facilities that are not included in the optimization, a moderate expansion of storage capacities appears to be a no-regret strategy from a system perspective. Additional transmission and storage investments may not only foster renewable integration, but also increase the utilization of emission-intensive plants. A comparison of results for 2024 and 2034 indicates that this is only a temporary effect. In the long run, infrastructure investments gain importance in the context of an ongoing energy transition from coal to renewables. Because of long lead times, planning and administrative procedures for large-scale projects should start early. |
| Keywords: | German energy transformation, integrated planning, renewable integration, transmission, storage |
| JEL: | C61 H54 L94 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1402&r=reg |
| By: | Staritz, Cornelia; Küblböck, Karin |
| Abstract: | In the context of recent commodity price hikes, a political consensus has emerged on regulatory measures to reduce excessive speculation in commodity derivative markets. This paper gives an overview of current reform proposals of commodity derivate market regulation at the international (G20), US and EU level and assesses their scope and limitations. For such an assessment, the primary functions of commodity derivative markets for the real economy, i.e. price discovery and price risk hedging for commercial traders have to be taken as a benchmark. The paper concludes that important regulatory initiatives have been under way with a focus on improving transparency, regulating over the counter trade, installing position limits and strengthening regulatory authorities. However, there are important limitations, in particular in the form of broad exemptions (e.g. concerning position limits and commercial traders). Regulations that would more substantially reduce the dominance of financial investors and ensure the dominance of fundamentally based trading strategies have only marginally been addressed, such as restrictions on certain trading strategies (e.g. indexbased investments, technical/algorithmic trading, high frequency trading) and price stabilization mechanisms such as a multitier financial transaction tax. A prerequisite for effective regulation is a pro-active, flexible and dynamic approach that reflects on the risks of failure and adapts regulations if necessary given the changing dynamics and complexities of markets. Further, effective regulation has to take into account the multiple and interrelated roles of financial and large commercial traders being increasingly involved in speculative derivative and physical commodity trading. -- |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:oefsew:45&r=reg |
| By: | Luciano de Castro; Shmuel Oren; Alvaro Riascos; Miguel Bernal |
| Abstract: | This paper evaluates the impact of Resolution CREG 051 on the performance of the electricity markets in Colombia. We found out that productive efficiency has improved since the introduction of the Resolution, that is, the total costs of producing electricity have been reduced. This shows a positive impact of the Resolution. On the other hand, we also found that mark-ups and forward energy prices (from bilateral contracts) have increased since 2009, suggesting that there was an increase in the exercise of market power by producers. From the two previous points, we conclude that, although the productive efficiency has increased, the larger share of the efficiency gains were appropriated by the energy producers, rather than passed on to consumers. |
| Keywords: | Energy markets, auctions, centralized unit commitment. |
| JEL: | D22 D44 L94 Q41 |
| Date: | 2014–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:col:000094:011932&r=reg |
| By: | Roberto Fazioli |
| Abstract: | The effects of a complex liberalisation process in local gas distribution are examined in this paper. The aim of this analysis is to emphasise the multidimensional aspects of such a reform in gas market regulation at local level. First of all, Local Public Finance will bear strong losses due to minimisation of local public networks' remuneration and as a consequences of potential losses in local public small/medium firms. Also effective competition will be very feeble, due to strong financial barriers to entry the market. An oligopolistic scenario is probable, if not almost sure, for Gas Distribution Industry in the next few years, as the announced reform will be implemented without any correction in Public Regulation. |
| Keywords: | liberalisation; asset management; public infrastructures; energy distribution; public local finance; redistributive effects |
| JEL: | K23 L43 L95 H54 |
| Date: | 2014–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:udf:wpaper:2014093&r=reg |
| By: | Clemens Bonner |
| Abstract: | Government bonds receive preferential treatment in financial regulation. The purpose of this paper is to analyze the impact of this preferential treatment on banks' demand for government bonds. Using unique transaction-level data, our analysis suggests that preferential treatment in liquidity and capital regulation increases banks' demand for government bonds beyond their own risk appetite. Liquidity and capital regulation also seem to incentivize banks to substitute other bonds with government bonds. On top of that, we find evidence that regulation leads to a longer-term increase in government bond holdings. Finally, our results suggest that higher government bond holdings are associated with more lending and lower profits during normal times but not during stress. |
| Keywords: | Government bonds; financial markets; regulation; liquidity; capital |
| JEL: | G18 G21 E42 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:433&r=reg |
| By: | Tarullo, Daniel K. (Board of Governors of the Federal Reserve System (U.S.)) |
| Date: | 2014–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgsq:810&r=reg |
| By: | Achim Voß (University of Münster, Germany); Jörg Lingens (University of Münster, Germany) |
| Abstract: | Many environmental-policy problems are characterized by complexity and uncertainty. Government’s choice concerning these policies commonly relies on information provided by a bureaucracy. Environmental bureaucrats often have a political motivation of their own, so they might be tempted to misreport environmental effects in order to influence policy. This transforms a problem of uncertainty into one of asymmetric information. We analyze the ensuing principal-agent relationship and derive the government’s optimal contract, which conditions policy and rewards on reported environmental effects. We find that agents who are more environmentalist than the government are rewarded for admitting that the environmental impact is low (and vice versa). With higher uncertainty, the bureaucrat has a stronger influence on policy. For some values of the environmental impact, the bureau is permitted to set its own preferred policy (optimal delegation). |
| Keywords: | Environmental Policy, Political Economy, Delegation, Bureaucracy, Regulatory Agency, Mechanism Design, Type-dependent Participation Constraint, Pure State Constraints in Optimal Control |
| JEL: | D73 D82 C61 Q52 Q58 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2014.66&r=reg |
| By: | Devika Dutt (Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University) |
| Abstract: | Financial Crises can be shown to be related to the pro-cyclical nature of finance. In fact, the bigger financial crises are almost always preceded by a credit market or an asset market boom. And the recurrence of crises time and again suggests that financial regulation as it exists today has been ineffectual in preventing them. This paper explores the role that Counter-cyclical Financial Regulation could potentially play in the bringing about greater stability in the financial system by moderating the boom, so as to mitigate the bust. It considers the anatomy of a typical crisis using Minsky's Financial Instability Hypothesis, and tries to identify the general factors that trigger crises that regulation could address. Counter-cyclical regulation leans against the build-up of a credit bubble, and makes provisions when times are good for when the bubble burst and things turn awry. The paper builds a heuristic model to demonstrate how such regulation can impede the growth of a bubble. The paper also discusses the political economy associated with counter-cyclical regulation. Despite the limited experience with such regulation and the potentially adverse impact on output growth, counter-cyclical financial regulation has great potential for preventing financial crises. |
| Keywords: | Counter-cyclical financial regulation, credit cycles, endogenous instability, financial crisis. |
| JEL: | G01 G18 E32 E44 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:eyd:cp2013:255&r=reg |
| By: | Tarullo, Daniel K. (Board of Governors of the Federal Reserve System (U.S.)) |
| Date: | 2014–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgsq:806&r=reg |
| By: | Giuseppina Cannas (Joint Research Centre of the European Commission); Jessica Cariboni (Joint Research Centre of the European Commission); Massimo Marchesi (European Commission); Gaëtan Nicodème (European Commission); Marco Petracco Giudici (Joint Research Centre of the European Commission); Stefano Zedda (Joint Research Centre of the European Commission) |
| Abstract: | The question of additional taxes on banking institutions has recently been debated.At the same time, financial regulation in the banking sector is undergoing many changes aimed at strengthening financial stability. This paper uses SYMBOL, a micro-simulation model of the banking system, to estimate contributions to systemic risk of individual banks under various future regulatory scenarios and compares them to their potential tax liabilities under alternative designs of Financial Activity Taxes and Bank Levies. The results show that when contagion is not avoided, all taxes perform about the same way. However, when contagion is avoided, bank levies outperform FATs. |
| Keywords: | Taxation; Banks; Financial Activity Tax; Bank levy; Systemic Risk; Regulation |
| JEL: | F23 G32 H25 R38 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:tax:taxpap:0043&r=reg |
| By: | Benjamin H Cohen; Michela Scatigna |
| Abstract: | Bank capital ratios have increased steadily since the financial crisis. For a sample of 94 large banks from advanced and emerging economies, retained earnings account for the bulk of their higher risk-weighted capital ratios, with reductions in risk weights playing a lesser role. On average, banks continued to expand their lending, though lending growth was relatively slower among European banks. Lower dividend payouts and (for advanced economy banks) wider lending spreads have contributed to banks’ ability to use retained earnings to build capital. Banks that came out of the crisis with higher capital ratios and stronger profitability were able to expand lending more. |
| Keywords: | banks, bank capital, regulation, capital ratios, Basel III |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:443&r=reg |
| By: | Bräuninger, Michael |
| Abstract: | Taxation is a fundamental part of national sovereignty. The two dominant components of tax sovereignty are the ability to generate revenue and have full control over fiscal policy. Therefore, the key components of a state's expression of sovereignty are the right to determine tax rates, structures and the use of tax revenues. With a view to implementing of the WHO Framework Convention on Tobacco Control (FCTC) provisions on Article 6 - tax and price measures for tobacco products, Parties did not envisage adopting the guidelines to support the implementation of this article. The main reason behind this decision was that prescriptive obligations were inappropriate and unacceptable, because they would infringe on tax sovereignty, while national tax regulations would not permit an international body or treaty to create obligations in this important area. However, subsequently a decision was made to develop Article 6 guidelines. As a consequence the guidelines' content now deviates significantly from countries' original intentions and the FCTC Treaty. -- |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hwwirp:152&r=reg |
| By: | Owen, Ann L.; Temesvary, Judit |
| Abstract: | We explore the effects of culture, regulation, and geographical factors on bilateral cross-border bank lending. Using a newly compiled dataset on BIS-reporting banks’ activities, we find that geographical factors, information flows and common institutional arrangements are the primary drivers of bilateral bank lending. Trust between individuals in the two countries matters only as a proxy for other cultural similarities. The relationship between bank regulatory differences and lending flows has changed over time. Before the crisis, banks made more cross-border loans in countries with regulations that promoted market discipline and transparency, but took on more risk in countries that had less transparency, perhaps in pursuit of higher returns. This relationship between transparency and banking flows has disappeared in the aftermath of the financial crisis. |
| Keywords: | bank lending; international banking; bank regulations; gravity models; cross-country analysis |
| JEL: | E51 F3 |
| Date: | 2014–07–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57692&r=reg |