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on Regulation |
| By: | Cremer, Helmuth; De Donder, Philippe; Rodriguez, Frank |
| Abstract: | This note synthesises several research papers that IDEI has produced together with Royal Mail economists and others since 2000 and summarises their findings on the welfare and pricing implications of opening the postal market to competition, when the national postal operator operates under different regulatory requirements (e.g. price constraints or universal service obligations) and according to the competition regime (such as access only, bypass only, access and bypass) which emerges in the market following its liberalisation.4 The understanding of the postal sector and of likely effects of different types of regulation requires taking appropriate account of the specific nature of this industry. We then start this note (section 2) by mentioning the most important characteristics of the sector, which renders it different from other network industries such as telecoms or energy. We then summarise in section 3 the research papers. All papers share the same form: they start with a specific research question, build a formal model incorporating the relevant characteristics of the postal sector given this research question, and then provide numerical results based on a calibration of this model to a generic European postal market. The calibration assumptions are not from a particular postal operator, but are reflective, in our view, of the general nature of postal markets and cost structures found in published empirical studies. The same calibration assumptions are used in all papers, except when assumptions are updated to reflect the results of newly available empirical studies. In most of the papers we have checked the robustness of our results through sensitivity testing of key calibration values. However, we should stress that these results are indicative and in any particular country, for example the UK, a more detailed empirical exercise would be necessary to model prospective effects directly. Section 4 concludes with a brief summary of the main results surveyed here. |
| Keywords: | postal; regulation; welfare; pricing |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:29060&r=reg |
| By: | Ali Hortaçsu; Seyed Ali Madanizadeh; Steven L. Puller |
| Abstract: | Many jurisdictions around the world have deregulated utilities and opened retail markets to competition. However, inertial decisionmaking can diminish consumer benefits of retail competition. Using household-level data from the Texas residential electricity market, we document evidence of consumer inertia. We estimate an econometric model of retail choice to measure two sources of inertia: (1) search frictions/inattention, and (2) a brand advantage that consumers afford the incumbent. We find that households rarely search for alternative retailers, and when they do search, households attach a brand advantage to the incumbent. Counterfactual experiments show that low-cost information interventions can notably increase consumer surplus. |
| JEL: | D8 L0 L5 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20988&r=reg |
| By: | Peitz, Martin; Schuett, Florian |
| Abstract: | Under strict net neutrality Internet service providers (ISPs) are required to carry data without any differentiation and at no cost to the content provider. We provide a simple framework with a monopoly ISP to evaluate different net neutrality rules. Content differs in its sensitivity to delay. Content providers can use congestion control techniques to reduce delay for their content, but do not take into account the effect of their decisions on the aggregate volume of traffic. As a result, strict net neutrality often leads to socially inefficient traffic in ation. We show that piece-meal departures from net neutrality, such as transmission fees or prioritization based on sensitivity to delay, do not necessarily improve efficiency. However, allowing the ISP to introduce bandwidth tiering and charge for prioritized delivery can implement the efficient allocation. |
| Keywords: | Net neutrality , network congestion , telecommunications , quality of service |
| JEL: | L12 L51 L86 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:mnh:wpaper:37535&r=reg |
| By: | Flues, Florens; Lutz, Benjamin Johannes |
| Abstract: | Germany taxes electricity use since 1999. The government granted reduced rates to energy intensive firms in the industrial sector for addressing potentially adverse effects on firms' competitiveness. Firms that use more electricity than certain thresholds established by legislation, pay reduced marginal tax rates. As a consequence, the marginal tax rate is a deterministic and discontinuous function of electricity use. We identify and estimate the causal effects of these reduced marginal tax rates on the economic performance of firms using a regression discontinuity design. Our econometric analysis relies on official micro-data at the plant and firm level collected by the German Federal Statistical Office that cover the whole manufacturing sector. We do not find any systematic, statistically significant effects of the electricity tax on firms' turnover, exports, value added, investment and employment. The results suggest that eliminating the reduced marginal electricity tax rates could increase revenues for the government without adversely affecting firms' economic performance. |
| Keywords: | Efficiency of Environmental Taxes,Control of Externalities,Regression Discontinuity Design |
| JEL: | D22 H21 H23 Q41 Q48 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:15013&r=reg |
| By: | Bruno Lanz; Allan Provins |
| Abstract: | Discrete choice experiments (DCE) are increasingly used to quantify the demand for improvements to services provided by regulated utility companies and inform price controls. This form of preference elicitation, however, often reveals a high frequency of status quo (SQ) choices. This may signal an unwillingness of respondents to evaluate the proposed trade-offs in service levels, questioning the welfare theoretic interpretation of observed choices and the validity of the approach for regulatory purposes. Using the methodology for DCE in the regulation of water and sewerage services in England and Wales, our paper contributes to the understanding of SQ choices in several novel dimensions. First, we control for the perception of the SQ and the importance of attributes in day-to-day activities. Second, we use a split sample design to vary both the description of the SQ and the survey administration mode (online vs. in-person). Third, the service attributes can both improve or deteriorate, so that the SQ is not necessarily the least-cost option. Fourth, we examine SQ choices in individual choice tasks and across all tasks so as to identify the determinants of serial SQ choices. Our results suggest that individual SQ choices mostly reflect preferences and thus represent important information for the regulator. However, serial SQ choices are mainly driven by cognitive and/or contextual factors, and these responses should be analysed as part of standard validity tests. |
| Keywords: | Cost-benefit analysis; Regulated utilities; Economic valuation; Discrete choice experiments; Individual decision making; Status quo effect. |
| JEL: | C25 L43 L95 Q25 Q51 Q58 |
| Date: | 2015–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:gii:ciesrp:cies_rp_35&r=reg |
| By: | Nikodinoska, Dragana; Schröder, Carsten |
| Abstract: | By using estimates from an Almost Ideal Demand System (AIDS), we investigate how the German energy tax on car fuels changes the private households-CO2 emissions, living standards, and post-tax income distribution. Our results show that the tax implies a trade-off between the aim to reduce emissions and vertical equity, which refers to the idea that people with a greater ability to pay taxes should pay more. |
| Keywords: | energy taxes,environmental taxes,energy demand,emissions,tax incidence,redistribution,inequality |
| JEL: | C31 D12 D63 H22 H23 I3 K32 Q21 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:20156&r=reg |
| By: | Thomas Nikolokakis; Debabrata Chatopadhyay |
| Keywords: | Environment - Climate Change Mitigation and Green House Gases Energy - Energy and Environment Power and Energy Conversion Energy - Energy Production and Transportation Environment - Environment and Energy Efficiency |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:21359&r=reg |
| By: | Hirsch, Alexander V. (CA Institute of Technology); Shotts, Kenneth W. (Stanford University) |
| Abstract: | We analyze a model of policymaking in which only one actor, e.g., a bureaucratic agency or a well-funded interest group, has the capacity to develop high-quality policy proposals. By virtue of her skills, this actor has an effective monopoly on policy development and thus can craft proposals that are good for herself but provide few benefits to decisionmakers who enact policies. We then examine institutional responses that decisionmakers can use to induce a policy-development monopolist to develop more-appealing proposals: (i) establishing in-house policy development capacity, (ii) delegating authority to an agent who counterbalances the monopolist's preferences, and (iii) fostering competition by policy entrepreneurs with different preferences. We apply our model to a diverse set of contexts, including bureaucratic policymaking in Japan, lobbying in term-limited state legislatures, regulation of banking and financial services, and administrative procedures for rulemaking in U.S. federal bureaucracies. |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3137&r=reg |