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on Regulation |
| By: | Simona Benedettini; Federico Pontoni |
| Abstract: | The increase in distributed generation and the increasingly pro-active role of mass consumers demand smart distribution networks. To this aim, regulation too must innovate, in order to promote innovative and additional infrastructural investments.his paper develops, first, a methodological framework addressing the relevant drivers for the regulation of distribution network investments. In the light of this framework, we then perform a critical overview of the British and Italian regulatory approach to distribution network investments. Finally, we discuss some policy insights for the Italian regulator. |
| Keywords: | electricity distribution network, investments, regulation |
| JEL: | L94 L98 |
| URL: | http://d.repec.org/n?u=RePEc:bcu:iefewp:iefewp50&r=reg |
| By: | Robert Marschinski (MCC, PIK, TU-Berlin); Philippe Quirion (CNRS et CIRED) |
| Abstract: | We study the performance under uncertainty of three renewable energy policy instruments: Tradable Renewable Quota (TRQ), Feed-In-Tariff (FIT), and Feed-In-Premium (FIP). We develop a stylized model of the electricity market, where renewables are characterized by a positive learning externality, which the regulator aims to internalize. Assuming shocks on the fossil-based electricity supply, renewables supply, or on total electricity demand, we analytically derive the conditions determining the instruments’ relative welfare ranking. Although we generally confirm the key role of the slopes of marginal benefits and costs associated with the policy, the specific ranking depends on which type of uncertainty is considered, and whether shocks are permanent or transitory. However, a high learning rate generally favours the FIT, while TRQ is mostly dominated by the other two instruments. These results are confirmed in a numerical application to the US electricity market, in which the FIP emerges as the most robust overall choice and TRQ as the least robust. |
| Keywords: | Feed-in premium, Feed-in tariff, Renewable energy policy, Renewable portfolio standard, Tradable renewable quota. |
| JEL: | Q42 Q54 Q55 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2014.14&r=reg |
| By: | Friedrich Kunz; Karsten Neuhoff; Juan Rosellón |
| Abstract: | A shift from zonal pricing to smaller zones and nodal pricing improves efficiency and security of system operation. Resulting price changes do however also shift profits and surplus between and across generation and load. As individual actorscan lose, they might oppose any reform. We explore how free allocation of financial transmission rights to generation and load can be used to mitigate the distributional impact. In a three node network we explore the fundamental effects with regard to reference node/hub for FTRs, the share of FTRs to be allocated for free and the metric to determine the proportion of rights allocated to different generation and load. We test the results in a more realistic setting based on hourly modelling of the German power system at nodal representation. |
| Keywords: | Electricity market, financial transmission right, congestion management, market design, Germany |
| JEL: | L52 L94 Q40 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1418&r=reg |
| By: | Committee, Nobel Prize (Nobel Prize Committee) |
| Abstract: | To what extent should the government intervene in the marketplace? Economists often consider fiercely competitive markets to be in the public interest. When producers in such markets strive to earn a profit, they are led — as if by an invisible hand — to deliver high quality at low cost. But many industries are not very competitive, and this lack of competition widens the scope for beneficial public intervention. Theories of regulation and competition policy aim to provide useful scientific guidance for such intervention. Clearly, any recommendations must rest on a sound understanding of how imperfectly competitive markets work. When a firm has market power, how will it behave? How does its behavior affect the firm’s suppliers, customers, and competitors? Questions like these are studied within the field of Industrial Organization (IO). George Stigler was awarded the 1982 Prize in Economic Sciences “for his seminal studies of industrial structures, functioning of markets and causes and effects of public regulation”. Since then, however, the IO field has undergone rapid development, indeed a revolution. This revolution has greatly enhanced our understanding of imperfectly competitive markets, which in turn has laid a foundation for better informed competition policy. Comparable progress has been made in the theory of optimal regulation of firms with market power. |
| Keywords: | Market power; |
| JEL: | D40 |
| Date: | 2014–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:ris:nobelp:2014_002&r=reg |
| By: | Frédéric Branger (AgroParisTech ENGREF et CIRED); Philippe Quirion (CNRS et CIRED) |
| Abstract: | We develop a stochastic model to rank different policies (tax, fixed cap and relative cap) according to their expected total social costs. Three types of uncertainties are taken into account: uncertainty about abatement costs, business-as-usual (BAU) emissions and future economic output (the two latter being correlated). Two parameters: the ratio of slopes of marginal benefits and marginal costs, and the above-mentioned correlation, are crucial to determine which instrument is preferred. When marginal benefits are relatively flatter than marginal costs, prices are preferred over fixed caps (Weitzman’s result). When the former correlation is higher than a parameter-dependent threshold, relative caps are preferred to fixed caps. An intermediate condition is found to compare the tax instrument and the relative cap. The model is then empirically tested for seven different regions (China, the United States, Europe, India, Russia, Brazil and Japan). We find that tax is preferred to caps (absolute or relative) in all cases, and that relative caps are preferred to fixed caps in the US and emerging countries (except Brazil where it is ambiguous), whereas fixed cap are preferred to relative cap in Europe and Japan. |
| Keywords: | Instrument, Price, Quantity, Intensity Target, Regulation, post-Kyoto, Uncertainty, Climate Policy |
| JEL: | Q58 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2014.09&r=reg |
| By: | Simone Borghesi (University of Siena, Italy.); Giulio Cainelli (University of Padova, Italy.); Massimiliano Mazzanti (University of Ferrara, Italy; SEEDS, Ferrara, Italy.) |
| Abstract: | This paper examines the different forces underlying the adoption of environmental innovations (EI), with a focus on policy related EI. In particular, exploiting the 2006-2008 wave of the Italian Community Innovation Survey (CIS), we investigate whether the first phase of the European Emissions Trading Scheme (EU-ETS) exerted some effects on EI in CO2 abatement and energy efficiency controlling for other variables, grouped as internal/external to the firm, and additional environmental regulation factors. Our empirical analyses show that a few factors emerge as particularly relevant such as relationships with other firms and institutions, sectoral energy expenditure intensity, and current and future expected environmental regulation. For the specific role of the EU ETS, we find that, on the one hand ETS sectors are more likely to innovate than non-ETS sectors but on the other hand that sector specific policy stringency is negatively associated with EI, possibly due to anticipatory behavior from early moving innovative firms and some sector idiosyncratic factors. |
| Keywords: | Environmental innovation, EU-ETS, CIS EU data, manufacturing |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:srt:wpaper:2714&r=reg |
| By: | Jérôme Vicente |
| Abstract: | Cluster policies have been recently called into question in the aftermath of several empirical evidences. Disentangling how market and network failures arguments play together in cluster policy design, we look for more robust micro foundations of network structuring in clusters. Our aim is to show that, in spite of this growing skepticism, new opportunities for cluster policy exist. They require moving their focus from the “connecting people” one best way that gets through the whole of cluster policy guidelines, to more surgical incentives for R&D collaborations, which favor suited structural properties of local knowledge networks along the life cycle of clusters. |
| Keywords: | cluster policy, knowledge spillover, network failures |
| JEL: | B52 D85 O33 R12 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1420&r=reg |
| By: | Camila Casas |
| Abstract: | In this paper, I estimate the demand for housing in Bogotá, modeling electricity consumption explicitly to take into account the crossed subsidies included in Colombian utility rates. I use household level data on housing prices, observable dwelling attributes, and demographic variables to recover the willingness to pay for housing characteristics following the three-step estimation procedure suggested by Bajari and Kahn (2005). First, I regress the price of housing against different observable dwelling characteristics to recover the implicit price of each feature. Next, I infer household-specific preference parameters from the utility maximizing first-order conditions, where a household’s utility depends on these observable characteristics. Finally, I analyze the relationship between demographic variables and the taste parameters estimated in the previous step. In order to study the impact of subsidies on households’ housing decisions, I focus on the impact of changes in the price of electricity on the choice of dwelling size. I find that subsidized households choose bigger dwellings than they would in the absence of subsidies, while those who are taxed choose smaller ones. Classification JEL: H2, H4, I3, R21. |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:847&r=reg |