nep-reg New Economics Papers
on Regulation
Issue of 2015‒04‒02
ten papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Carbon Pricing and Electricity Market Reforms in China By Jin Fan; Dingtao Zhao; Yanrui Wu; Jiuchang Wei
  2. Net neutrality and inflation of traffic By Peitz, M.; Schütt, F.
  3. Price competition and reputation in markets for experience goods: An experimental study By Huck, Steffen; Lünser, Gabriele K.; Tyran, Jean-Robert
  4. Raising the Potential of the Domestically Oriented Sector in Germany By André Eid; Andrés Fuentes Hutfilter
  5. Financing energy and low-carbon investment: public guarantees and the ECB By Michel Aglietta; Étienne Espagne
  6. Marginal cost estimation for level crossing accidents: evidence from the Swedish railways 2000-2012 By Jonsson, Lina; Björklund, Gunilla
  7. Fossil fuel subsidies : approaches and valuation By Kojima,Masami; Koplow,Doug
  8. Modelling of distributional impacts of energy subsidy reforms: an illustration with Indonesia By Olivier Durand-Lasserve; Lorenza Campagnolo; Jean Chateau; Rob Dellink
  9. Is China's carbon reduction target allocation reasonable? An analysis based on carbon intensity convergence By Yu Hao; Hua Liao; Yi-Ming Wei
  10. Improving Transport Infrastructure in Russia By Alexander Kolik; Artur Radziwill; Natalia Turdyeva

  1. By: Jin Fan (School of Management, University of Science and Technology of China); Dingtao Zhao (School of Management, University of Science and Technology of China); Yanrui Wu (University of Western Australia); Jiuchang Wei (School of Management, University of Science and Technology of China)
    Abstract: As a large emerging economy, China is exploring to establish a carbon pricing system to mitigate greenhouse gas emissions. The electricity sector which generates the greatest amount of China's carbon dioxide (CO2) emissions should be covered by such a carbon pricing system. The review of the three main stages of China's electricity market reforms shows that the degree of electricity marketization is relatively low, which might become an obstacle to carbon pricing. This paper develops theoretical and empirical models to analyze the impacts of carbon pricing on electricity supply under two scenarios, namely, marketization and regulation. It is concluded that the electricity market reform is a prerequisite for the development of carbon pricing. Without market-oriented reforms of electricity pricing in China, carbon pricing might lead to a shortage in electricity supply. Potential electricity market reforms to encourage market competition and promote market-oriented electricity-pricing are also suggested.
    Date: 2014
  2. By: Peitz, M.; Schütt, F. (Tilburg University, Center For Economic Research)
    Abstract: Under strict net neutrality Internet service providers (ISPs) are required to carry<br/>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 inflation. 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<br/>efficient allocation.
    Keywords: Net neutrality; network congestion; telecommunications,; uality of service
    JEL: L12 L51 L86
    Date: 2015
  3. By: Huck, Steffen; Lünser, Gabriele K.; Tyran, Jean-Robert
    Abstract: We experimentally examine the effects of price competition in markets for expe-rience goods where sellers can build up reputations for quality. We compare price competition to monopolistic markets and markets where prices are exogenously fixed (somewhere between the endogenous oligopoly and monopoly prices). While oligopolies benefit consumers regardless of whether prices are fixed or endoge-nously chosen, we find that price competition lowers efficiency as consumers pay too little attention to reputation for quality. This provides empirical support to recent models in behavioral industrial organization that assume that consumers may with increasing complexity of the market place focus on selected dimensions of products. We also find that consumers' attention to quality and, hence, provided quality drops when regulated prices are set at levels that are too low.
    Keywords: Markets,Price competition,Behavioral IO,Price regulation,Reputation,Trust,Moral hazard,Experience goods
    JEL: C72 C90 D40 D80 L10
    Date: 2015
  4. By: André Eid; Andrés Fuentes Hutfilter
    Abstract: Germany’s manufacturing sector, which plays an important role for exports, has been performing well over the past decade in terms of labour productivity growth and international competitiveness. However, the services sector has had much slower growth rates. Competition often appears to be hindered by protection of incumbents. Reforming and deregulating the domestically oriented sectors, including network industries, crafts and professional services would release hidden growth potential and prove beneficial to the economy as a whole. It could also help strengthen domestic demand and reduce dependence on exports. This Working Paper relates to the 2014 Economic Survey of Germany (<P>Relever le potentiel des secteurs orientés sur le marché intérieur en Allemagne<BR>Au cours de la dernière décennie, le secteur manufacturier allemand, qui joue un rôle important dans les exportations, a enregistré de bons résultats, en termes de hausse de la productivité de la main-d’oeuvre comme de compétitivité internationale. Le secteur des services en revanche affiche des taux de croissance bien plus modestes. Il semble que la concurrence y ait souvent été entravée du fait de la protection des entreprises en place. Réformer et déréglementer les secteurs orientés sur le marché intérieur, notamment les industries de réseau, l’artisanat et les services professionnels, permettrait de libérer le potentiel de croissance caché et serait bénéfique pour l’économie dans son ensemble, et contribuerait en outre à renforcer la demande intérieure et à réduire la dépendance par rapport aux exportations. Ce document de travail se rapporte à l’Étude économique de l’OCDE de l’Allemagne, 2014 ( ique-allemagne.htm).
    Keywords: services, Germany, competition policy, renewable energy, regulation, énergies renouvelables, politique de la concurrence, services, Allemagne, régulation
    JEL: L50 L80 L84 L88 L98
    Date: 2015–03–25
  5. By: Michel Aglietta; Étienne Espagne
    Abstract: The eurozone has been said to have caught a disease called "secular stagnation". Productive investment in the private sector fell by about 20% overall between 2007 and 2014, while private saving has surged, creating a huge gap between gross domestic savings and investment. The trajectory of actual GDP has decoupled from successive estimates of potential GDP, and there is no sign of a spontaneous short-term adjustment. The engineering of a powerful investment drive seems the only way out of this self-fulfilling low-growth trap. The European Union has already set investment objectives in the Climate and Energy Package. These targets cover four areas: renewable energy supply capacity, electricity distribution networks, energy efficiency in building renovation and urban mobility. Several financing tools need to be combined to tailor risk-sharing devices for investments in each of these sectors. First and foremost, is the integration of a high carbon price. However, as any sudden sharp increase in the overall carbon price would have a major (and politically unsustainable) impact on the rest of the economy, a core issue is how to create a transitory distinction between the carbon price included/paid by the existing capital stock and the carbon price included/paid by new low carbon investments. This can be achieved through a two-tier approach. First, for the four key sectors, a high notional carbon price is used to set an asset value on the carbon saved by new investments ("carbon asset"): these assets are accepted as repayment by central banks, and publically guaranteed. The ECB, by buying financial instruments issued by the low-carbon investors, creates a direct transmission channel to these areas of the economy. Second, fiscal measures ensure the carbon price catches up with the notional value, thus generating revenues that allow for the purchase of the carbon debt held by the central banks, guaranteeing the final budget neutrality of the process. By focusing on investments in these four sectors, the European output gap could be closed in the short run and a credible path opened to a low carbon economy.
    Keywords: Ecular Stagnation;Social Cost of Carbon;Certification;Low Carbon Transition
    JEL: Q43 Q48
    Date: 2015–03
  6. By: Jonsson, Lina (WSP); Björklund, Gunilla (VTI)
    Abstract: This study examines the relationship between train traffic and the accident risk for road users at level crossings. The marginal effect of train traffic on the accident risk can be used to derive the marginal cost per train passage that is due to level crossing accidents. Based on Swedish data from 2000 to 2012 on level crossing accidents, train volume and crossing characteristics, the marginal cost per train passage is estimated at SEK 1.28 (EUR 0.13) on average in 2012. The cost per train passage varies substantially depending on type of protection device, road type and the traffic volume of the trains.
    Keywords: Railway; Marginal cost; Accident probability; Level crossings
    JEL: D62 H23 R41
    Date: 2015–03–23
  7. By: Kojima,Masami; Koplow,Doug
    Abstract: Numbers ranging from half a trillion to two trillion dollars have been cited in recent years for global subsidies for fossil fuels. How are these figures calculated and why are they so different? The most commonly used methods for measuring subsidies are the price-gap approach -- quantifying the gap between free-market reference prices and the prices charged to consumers -- the inventory approach, which constructs an inventory of government actions benefiting production and consumption of fossil fuels. Practitioners are not faced with two choices. The two methods are complementary and should be used together -- price gaps cause distortions throughout the economy and quantification is needed for improving pricing policies; an inventory is useful for examining budgetary allocation. An inventory based on a full accounting framework for producer and consumer support estimates in fact captures price gaps as market transfers to producers or consumers. Differences in subsidy valuation arise from assumptions made to compensate for missing data and the scope of subsidy measurement. Having a common understanding of terms and standardizing calculation methods would go a long way in enabling comparison of subsidies across countries and sectors, benchmarking pricing, and assessing subsidy policies. Subsidy measurement should not be viewed as a one-off exercise to inform subsidy reform strategies. Just as subsidy reform in many countries does not have a clear end but is a continuous process of adjustment, so too is subsidy tracking. Devoting resources to data collection and analysis to track subsidies on a continuous basis can bring rich dividends by increasing transparency and enabling informed decisions.
    Keywords: Economic Theory&Research,Markets and Market Access,Energy Production and Transportation,Environmental Economics&Policies,Transport Economics Policy&Planning
    Date: 2015–03–23
  8. By: Olivier Durand-Lasserve; Lorenza Campagnolo; Jean Chateau; Rob Dellink
    Abstract: This report develops an analytical framework that assesses the macroeconomic, environmental and distributional consequences of energy subsidy reforms. The framework is applied to the case of Indonesia to study the consequences in this country of a gradual phase out of all energy consumption subsidies between 2012 and 2020. The energy subsidy estimates used as inputs to this modelling analysis are those calculated by the International Energy Agency, using a synthetic indicator known as “price gaps”. The analysis relies on simulations made with an extended version of the OECD’s ENV-Linkages model. The phase out of energy consumption subsidies was simulated under three stylised redistribution schemes: direct payment on a per household basis, support to labour incomes, and subsidies on food products. The modelling results in this report indicate that if Indonesia were to remove its fossil fuel and electricity consumption subsidies, it would record real GDP gains of 0.4% to 0.7% in 2020, according to the redistribution scheme envisaged. The redistribution through direct payment on a per household basis performs best in terms of GDP gains. The aggregate gains for consumers in terms of welfare are higher, ranging from 0.8% to 1.6% in 2020. Both GDP and welfare gains arise from a more efficient allocation of resources across sectors resulting from phasing out energy subsidies. Meanwhile, a redistribution scheme through food subsidies tends to create other inefficiencies. The simulations show that the redistribution scheme ultimately matters in determining the overall distributional performance of the reform. Cash transfers, and to a lesser extent food subsidies, can make the reform more attractive for poorer households and reduce poverty. Mechanisms that compensate households via payments proportional to labour income are, on the contrary, more beneficial to higher income households and increase poverty. This is because households with informal labour earnings, which are not eligible for these payments, are more represented among the poor. The analysis also shows that phasing out energy subsidies is projected to reduce Indonesian CO2 emissions from fuel combustion by 10.8% to 12.6% and GHG emissions by 7.9% to 8.3%, in 2020 in the various scenarios, with respect to the baseline. These emission reductions exclude emissions from deforestation, which are large but highly uncertain and for which the model cannot make reliable projections.<BR>Ce rapport élabore un cadre analytique qui évalue les effets macroéconomiques, environnementaux et redistributifs des réformes des subventions énergétiques. Il applique ce cadre au cas de l’Indonésie afin d’étudier les conséquences dans ce pays d’une suppression progressive de toutes les subventions à la consommation d’énergie entre 2012 et 2020. Les estimations des subventions à l’énergie sur lesquelles se base cette analyse par modélisation sont celles calculées par l’Agence internationale de l’énergie, à l’aide d’un indicateur synthétique appelé « différentiel de prix ». L’analyse repose sur des simulations réalisées avec une version enrichie du modèle ENV-Linkages de l’OCDE, modèle dynamique d’équilibre général calculable (EGC) mondial. La suppression des subventions à la consommation d’énergie a été simulée en retenant trois types de dispositifs de redistribution : un paiement direct au niveau des ménages, un soutien aux revenus du travail et des subventions aux produits alimentaires. Les résultats de la modélisation réalisée dans ce rapport indiquent que si l’Indonésie venait à supprimer ses subventions à la consommation des combustibles fossiles et d’électricité, elle enregistrerait des gains de PIB réel de 0.4 % à 0.7 % en 2020, selon le dispositif de redistribution retenu. La redistribution sous forme de paiements directs au niveau des ménages donne les meilleurs résultats en termes de gains de PIB. Le gain global pour les consommateurs en termes de bien-être est plus élevé, allant de 0.8 % à 1.6 % en 2020. Les gains en matière de PIB et de bien-être sont obtenus grâce à une répartition des ressources entre les secteurs de façon plus efficiente à la suite de l’élimination des subventions énergétiques. Dans l’intervalle, un dispositif de redistribution sous forme de subventions alimentaires tend à créer d’autres inefficacités, qui compensent en partie les avantages macroéconomiques de la suppression des subventions à la consommation d’énergie. Les simulations montrent aussi qu’à terme, le dispositif de redistribution joue un rôle en déterminant l’effet redistributif global de la réforme. Les transferts monétaires, et dans une moindre mesure les subventions alimentaires, peuvent rendre la réforme plus profitable pour les ménages pauvres et faire reculer la pauvreté. À l’inverse, les mécanismes qui compensent les ménages à l’aide de paiements proportionnels aux revenus du travail bénéficient davantage aux ménages à revenu élevé et accroissent la pauvreté. En effet, les ménages qui reçoivent des revenus du travail dans le secteur informel et qui ne peuvent prétendre à ces paiements, sont plus nombreux chez les pauvres. L’analyse montre aussi que d’après les prévisions, la suppression des subventions énergétiques en Indonésie devrait réduire les émissions de CO2 dues à la combustion des énergies fossiles de 10.8 % à 12.6 % et les émissions de GES de 7.9 % à 8.3 % en 2020 selon les différents scénarios, par rapport au scénario de référence. Ces réductions d’émissions ne tiennent pas compte des émissions dues à la déforestation, qui sont élevées mais restent très mal connues, et au sujet desquelles le modèle ne peut pas faire de projections fiables.
    Keywords: computable and other applied general equilibrium models, Indonesia, distributional impact, households’ heterogeneity, fossil fuel subsidy reforms, hétérogénéité des ménages, réforme des subventions aux énergies fossiles, effets distributifs, Indonésie, modèle d’équilibre général calculable
    JEL: C68 H23 O53
    Date: 2015–03–27
  9. By: Yu Hao; Hua Liao; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology)
    Abstract: To curb CO2 emissions, the Chinese government has announced ambitious goals to reduce the CO2 intensity of GDP, and the total target has been allocated to all Chinese provinces during the twelfth "Five-year Plan" period (2011-2015). Although setting the target allocation plan is an efficient way to achieve this goal, some key questions, including how the plan is designed, remained unanswered. From an economic perspective, this requires us to test for the existence of convergence in the CO2 intensity of GDP because the convergence is one of the most important intrinsic economic characteristics that policy makers should take into account: if the convergence exists, the provinces with a higher CO2 intensity of GDP tend to experience a more rapid reduction in the intensity and therefore could share a heavier burden of the intensity reduction. The existence of stochastic convergence and ¦Â-convergence is verified by employing different estimation methods and using various estimation specifications. As a result, the direct policy implication is that provinces with high CO2 intensity should be assigned tougher reduction targets to cut CO2 intensity at higher speeds, while the provinces with low carbon intensity should be allowed to reduce the CO2 intensity at a relatively lower speed. Because some social and economic indicators such as GDP per capita, industrial structure and population density may influence CO2 intensity, the policy makers should take all these factors into consideration to design reasonable reduction target allocation plan.
    Keywords: CO2 intensity of GDP, convergence, China, panel data
    JEL: Q47 Q54
    Date: 2014–09–01
  10. By: Alexander Kolik; Artur Radziwill; Natalia Turdyeva
    Abstract: Transport can play an important role in promoting growth, diversification and regional convergence. However, with insufficient investment and incomplete structural reforms, Russia faces very large challenges in modernising its large transport system. Urban transport problems are intensifying, because of weak policy coordination and inadequate traffic management. Promoting competition in the transport sector is essential, in particular by effectively opening the railway freight market to independent operators. This Working Paper relates to the 2013 Economic Survey of the Russian Federation (<P>Améliorer les infrastructures de transport en Russie<BR>Les transports peuvent jouer un rôle important dans la promotion de la croissance, la diversification et la convergence régionale. Cependant, du fait d’un niveau insuffisant d’investissements et de réformes structurelles incomplètes, la Russie doit faire face à de très grands défis afin de moderniser son système de transport. Les problèmes de transport urbain s'intensifient en raison de la faible coordination des politiques et d’une gestion inadéquate du trafic. Promouvoir la concurrence dans le secteur des transports est essentiel en particulier via l'ouverture effective du marché du fret ferroviaire aux opérateurs indépendants. Ce document de travail se rapporte à l’Étude économique de l’OCDE 2013 sur la Fédération de Russie ( ique-russie.htm).
    Keywords: competition, transport, environmental standards, safety standards, traffic management, infrastructure, normes environnementales, normes de sécurité, gestion du trafic, transport, concurrence, infrastructure
    Date: 2015–03–25

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