nep-reg New Economics Papers
on Regulation
Issue of 2014‒12‒03
twelve papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Product market regulation, innovation and productivity By Bruno Amable; Ivan Ledezma; Stéphane Robin
  2. Coexistence of copper and fiber unbundling: Access charges and investment incentives By Tselekounis, Markos; Orfanou, Georgia; Varoutas, Dimitris
  3. The future of telecom regulation: The case of Denmark By Henten, Anders; Falch, Morten
  4. Catch me if you can: The interplay between the incumbent and the regulator in the Italian telecommunications market By Pontarollo, Enzo; Gerli, Paolo
  5. Competition for access provision: Infrastructure upgrades with spillovers By Matsushima, Noriaki; Mizuno, Keizo
  6. Policy Uncertainty under Market-Based Regulations: Evidence from the Renewable Fuel Standard By Lade, Gabriel; Lin, C.-Y. Cynthia; Smith, Aaron
  7. A one-two punch: Joint effects of natural gas abundance and renewables on coal-fired power plants By Harrison Fell; Daniel T. Kaffine
  8. Regulation development on licensed shared access and TV white spaces By Châtaignier, Arnaud; Ahmed, Ashraf Awadelkarim Widaa; Teslenko, Maxim; Markendahl, Jan
  9. Managing the Risks of Shale Gas Development Using Innovative Legal and Regulatory Approaches By Olmstead, Sheila; Richardson, Nathan
  10. Deregulating fixed voice services? Empirical evidence from the European Union By Šaric, Amela; Lange, Mirjam R. J.
  11. The first ever spectrum auction in Poland: Assumptions, expectations, results By Kubasik, Jerzy
  12. The Implications of Market Structure for Appliance Energy Efficiency Regulation By Spurlock, C. Anna

  1. By: Bruno Amable (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, CEPREMAP - Centre pour la recherche économique et ses applications - Centre pour la recherche économique et ses applications, IUF - Institut Universitaire de France - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique); Ivan Ledezma (LEDa - Université Paris-Dauphine, IRD - DIAL - UMR 225); Stéphane Robin (PRISM - Pôle de recherche interdisciplinaire en sciences du management - Université Paris I - Panthéon-Sorbonne : EA4101)
    Abstract: Several recent policy and academic contributions consider that liberalising product markets would foster innovation and growth. This paper analyses the innovation-productivity relationship at the industry-level for a sample of OECD manufacturing industries. We pay particular attention to the vertically-induced influence of product market regulation (PMR) of key input sectors of the economy on the innovative process of manufacturing and its consequences on productivity. We test for a differentiated effect of this type of PMR depending on whether countries are technological leaders or laggards in a given industry and for a given time period. Contrary to the most widespread policy claims, the innovation-boosting effects of liberalisation policies at the leading edge are systematically not supported by the data. These findings question the relevance of a research and innovation policy based on liberalisation.
    Keywords: Product market regulation; innovation; productivity; growth
    Date: 2014–03
  2. By: Tselekounis, Markos; Orfanou, Georgia; Varoutas, Dimitris
    Abstract: We study the impact of the access charges of copper and fiber unbundling on an incumbent's incentives to invest in fiber access networks. Once the fiber deployment is in place, the incumbent and the entrant compete for consumers in both copper and fiber markets. We show that when the regulator can freely set either the copper or the fiber access charge, there is a positive correlation between the fixed fiber (respectively, copper) access charge and the copper (respectively, fiber) access charge that maximizes the incumbent's profit after the investment. On the contrary, when the regulator is free to set both access charges, the incumbent's profit is an increasing function of both access charges. However, the decision of the incumbent to undertake the investment in fiber deployment is not only affected by its profit after the investment, but also by the opportunity cost of the investment. This cost is reflected by the profits that the incumbent earns when it does not invest in fiber access networks, and hence, the two firms compete for the provision of only copper-based services. We find that the optimal regulatory policy in terms of investment incentives is to set the copper access charge at the cost of providing the access to the copper access network and the fiber access charge at the level that maximizes the incumbent's profit after the investment. It should be noted that the proposed regulatory policy confirms the methodology of the EC Recommendation (2013/466/EU) for setting the copper and fiber access charges in order to promote competition and enhance the broadband investment environment.
    Keywords: Access regulation,Copper unbundling,Fiber unbundling,Investment incentives,Telecommunications
    JEL: L51 L96
    Date: 2014
  3. By: Henten, Anders; Falch, Morten
    Date: 2014
  4. By: Pontarollo, Enzo; Gerli, Paolo
    Abstract: In Italy, fixed telecommunications were liberalised 15 years ago, but the incumbent is still the dominant operator. The Italian antitrust authority has recently fined Telecom Italia for margin squeeze and technical sabotage, proving that the incumbent still has the incentive and the power to deploy anticompetitive conducts. This research studies Telecom Italia's anticompetitive behaviours and regulatory interventions from 2004 to 2012, in order to understand and assess how the incumbent's strategies are affected by regulation. Four wholesale markets (local loop unbundling, colocation, wholesale broadband access, wholesale line rental) and two retail markets (directories and non-geographic numbers) have been considered. For each market, both Telecom Italia's strategies and NRA's actions have been analysed and tracked in a timeline to show the interplay between the incumbent and the regulator and to assess the regulation effectiveness in preventing and discouraging anticompetitive conducts.
    Keywords: Anticompetitive conducts,market foreclosure,vertical integration,ex-ante regulation,ex-post regulation,price discrimination,non-price discrimination
    Date: 2014
  5. By: Matsushima, Noriaki; Mizuno, Keizo
    Abstract: We examine a game of competition with access provision in which service quality is endogenously determined through infrastructure upgrades with spillovers. There are two types of equilibria in the free competition regime. In particular, voluntary access provision with an access charge higher than access cost occurs in equilibrium, irrespective of the degree of spillover and the investment cost. However, foreclosure also occurs in equilibrium when the degree of spillover is small and the investment cost is low. We also show that, when voluntary access provision occurs in equilibrium, access regulation is socially desirable only if the degree of spillover is small and the investment cost is high. On the contrary, access regulation is socially desirable in the broader range of investment cost under foreclosure than under voluntary access provision.
    Keywords: access provision,infrastructure upgrades,foreclosure
    JEL: L43 L51 L96
    Date: 2014
  6. By: Lade, Gabriel; Lin, C.-Y. Cynthia; Smith, Aaron
    Abstract: Tradeable credits are a central component of many market-based regulations. Whenever the market for compliance credits is efficient and policies are enforced over time, credit prices should reflect both current and expected future discounted marginal compliance costs, which are a function of both expected future market conditions and policy environments. We study credit prices for a relatively recent policy, the market for Renewable Identification Numbers (RINs) under the Renewable Fuel Standard (RFS2). We provide a comprehensive study of RIN markets. Due to the dynamic nature of the program and the feature that credits can be banked and borrowed over time, we specify the first dynamic model of an industry facing a RFS2 to highlight the importance of expectations in driving current RIN prices. We then provide a test of market efficiency, and study historical cost drivers of prices. We find encouraging signs of a maturing over-the-counter market for RINs. Historically, the largest drivers of prices in the program has been policy announcements. We estimate that one particular announcement, the 2013 final rule, was responsible for between a \$10.3 and \$20.7 billion reduction in support the RFS2 provides for the US biofuel industry. The findings call into question the efficacy of using quantity based mechanisms such as the RFS2 to drive innovation and investments in new production technologies, particularly when the regulator faces a classical problem of dynamically inconsistent responses to increases in compliance costs.
    Keywords: Renewable Fuel Standard, Tradeable credits, Market Efficiency, Public Economics, Resource /Energy Economics and Policy, Q50, Q42, H23,
    Date: 2014
  7. By: Harrison Fell (Division of Economics and Business, Colorado School of Mines); Daniel T. Kaffine (Department of Economics, University of Colorado)
    Abstract: Since 2007, coal-fired electricity generation in the US has declined by a stunning 25%. At the same time, natural gas-fired generation and wind generation have dramatically increased due to technological advances and policy interventions. We examine the joint impact of natural gas prices and wind generation on coal generation, with a particular focus on the interaction between low natural gas prices and increased wind generation. Exploiting detailed daily unit-level data, we estimate the response of coal-fired generation across four transmission regions within the US. Low natural gas prices and increased wind generation have both led to reductions in coal-fired generation. Furthermore, we find evidence that the interaction between natural gas prices and wind generation is statistically and economically significant, and led to a greater reduction in coal-fired generation than would be explained by either factor alone. In some regions, marginal responses of coal-fired generation to natural gas prices in 2013 were several times what they would have been had wind generation remained at 2008 levels. Similar sensitivities were found for responses to wind generation. As a consequence, our results suggest that policies such as carbon pricing combined with those that increase wind generation would be complementary in terms of their impact on coal-fired generation.
    Date: 2014–11
  8. By: Châtaignier, Arnaud; Ahmed, Ashraf Awadelkarim Widaa; Teslenko, Maxim; Markendahl, Jan
    Date: 2014
  9. By: Olmstead, Sheila (Resources for the Future); Richardson, Nathan (Resources for the Future)
    Abstract: Booming production of oil and gas from shale, enabled by hydraulic fracturing technology, has led to tension between hoped-for economic benefits and feared environmental and other costs, with great associated controversy. Study of how policy can best react to these challenges and how it can balance risk and reward has focused on prescriptive regulatory responses and, to a somewhat lesser extent, voluntary industry best practices. While there is undoubtedly room for improved regulation, innovative tools are relatively understudied. The liability system predates environmental regulation yet still plays an important—and in some senses predominant—role. Changes to that system, including burden-shifting rules and increased bond requirements, might improve outcomes. Similarly, new regulation can and should incorporate modern understanding of the benefits of market-based approaches. Information disclosure requirements can benefit the liability system and have independent benefits of their own. Policymakers faced with a need for policy change in reaction to shale development should carefully consider alternatives to regulation and, when regulation is deemed necessary, consider which tool is best suited.
    Keywords: shale, shale gas, liability, market-based tools, burden shifting, information
    Date: 2014–07–18
  10. By: Šaric, Amela; Lange, Mirjam R. J.
    Abstract: This paper deals with the relationship between the traditional fixed-line, mobile and Voice over IP telephony in the EU.We estimate the supply and demand for fixed-line telephony using data on 25 EU member states for the 2006:Q2 - 2011:Q4 period. Employing instrumental variable approach, we obtain the following results. First, lower prices of Voice over IP and mobile reduce the demand for fixed-line telephony. This indicates some demand-side substitution. Second, we find no relationship between Voice over IP and fixed-line prices. Third, there is a positive and significant relationship between mobile and fixed-line prices. Estimated own- and cross-price elasticities are in the inelastic range. Hence, calls to deregulate fixed-line telephony may be too premature.
    Keywords: Fixed networks,Mobile services,Market definition,Hypothetical monopolist test,(De)regulation
    JEL: C23 L43 L51 L96
    Date: 2014
  11. By: Kubasik, Jerzy
    Abstract: So far no general exclusive frequency licenses have been granted in Poland through an auction. In the Regulatory Strategy until 2015, President of the Office of Electronic Commu-nications pointed to auction as a method of choosing companies which will be granted fre-quency licenses from 800 MHz band (so called digital dividend). The auction has been sched-uled to take place at the turn of 2013 and 2014, and is considered the biggest event of 2014 on the Polish telecommunications market. The article presents the main assumptions of the first ever spectrum auction in Poland on the basis of materials for auction assumptions' consulta-tions, auction documentation, opinions of entities involved that have been submitted during consultations as well as the position of the President of UKE. The author focuses on threats to execution of the auction itself as well as implementation of its results. The text is preceded by a short description of the Polish telecommunications market, especially in terms frequencies owned by the main players on this market, including their joint ventures and capital connec-tions.
    Keywords: regulation,spectrum auction,mobile services,LTE
    Date: 2014
  12. By: Spurlock, C. Anna
    Abstract: I derive and test predictions from the classic Mussa and Rosen (1978) second-degree price discrimination model using data from the United States clothes washer market. I find evidence consistent with price discrimination in the market response to energy efficiency policy changes. Concurrent with the effective dates of both the new 2004 and 2007 federal minimum efficiency and ENERGY STAR standards, within-model clothes washer prices dropped on average. The heterogeneous pattern of price reduction across market segments, and adjustments in the menu of products, were consistent with predictions from the price-discrimination model, and not with a perfectly competitive market.
    Keywords: Price discrimination, minimum performance standards, energy efficiency, Consumer/Household Economics, Research Methods/ Statistical Methods, D43, L51, Q48,
    Date: 2014–07–29

This nep-reg issue is ©2014 by Natalia Fabra. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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