nep-reg New Economics Papers
on Regulation
Issue of 2015‒04‒11
eleven papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. The Market Stability Reserve: Is Europe Serious about the Energy Union? By William Acworth; Nils May; Karsten Neuhoff
  2. Private and Public Information on the Nordic Intra-Day Electricity Market By Lazarczyk, Ewa
  3. Bringing Variable Renewable Energy Up to Scale : Options for Grid Integration Using Natural Gas and Energy Storage By Silvia Martinez Romero; Wendy Hughes
  4. Carbon Emissions Trading in China: The Evolution from Pilots to a Nationwide Scheme By ZhongXiang Zhang
  5. CO2-emissions from Norwegian oil and gas extraction By Gavenas, Ekaterina; Rosendahl, Knut Einar; Skjerpen, Terje
  6. Targeted carbon tariffs. Carbon leakage and welfare effects By Böhringer, Christoph; Bye, Brita; Fæhn, Taran; Rosendahl, Knut Einar
  7. The Analysis of Right-of-way for different road users in China: Passing-Passenger-Unit Versus Passenger-Car-Unit  By Xiong, Wen Professor; Zhang, Yuanyuan PhD; Chen, Xiaohong Professor; Jiang, Chao
  8. From Periphery to Core: Measuring Agglomeration Effects Using High-Speed Rail By Gabriel M. Ahlfeldt; Arne Feddersen
  9. Revealing incentives for Compatibility Provision in Vertically differentiated Network Industries By Filomena Garcia; Cecilia Vergari
  10. Energy transition under irreversibility: a two-sector approach By Prudence Dato
  11. Lessons of Reforms of the Telecom Sector By Jain, Rekha; Raghuram, G.

  1. By: William Acworth; Nils May; Karsten Neuhoff
    Abstract: The European Union Emission Trading Scheme (EU ETS) has been implemented to provide a common climate policy instrument across European Union countries, to contribute to a credible investment perspective for low-carbon investors and support further European integration of energy markets. Thus the EU ETS is a key element of the European Energy Union.However, given the accumulation of a large surplus in the EU ETS, there is now a consensus between the EuropeanCommission, the European Council and the European Union Parliament (ENVI vote) that a Market Stability Reserve (MSR) needs to be implemented. The Latvian Presidency announced on March 26th a mandate to start trilogue negotiations onthe implementation of an MSR. Yet there remains discrepancy on the design parameters which will determine how quickly the MSR can respond to the surplus and restore consistency, price credibility, and robustness for investors of EU ETS.If Europe misses the opportunity to secure a timely restoration of EU ETS, then individual member states are likely to implement national measures to deliver energy and climate objectives. For example Germany has started to debate a Carbon Price add on for very carbon intensive power production to secure modernization and efficient power production should the EU ETS price not recover by the end of the decade. In this Roundup, we explore five design elements of the MSR that will determine the speed at which the most prominent European energy and climate policy instrument, the EU ETS, can deliver consistency, price credibility, and robustness for investors. The discussion of these design elements in the trilogue process that begins today will show how serious EU member states are not only about Climate Policy but equally about the Energy Union as a common policy framework to enhance investment and energy security across Europe.
    Date: 2015
  2. By: Lazarczyk, Ewa (Research Institute of Industrial Economics (IFN))
    Abstract: This paper is an empirical investigation of how traders react to public news in a market where there are lots of non-scheduled announcements, often arriving simultaneously. Using detailed trade information from the Nordic intra-day electricity market and GARCH models, this paper examines market participants’ reaction to news about sudden production and transmission failures on the electricity grid. I divide the time of news announcement into three phases: the preannouncement period – the interval up to one hour before the hour of the public announcement of a message, the contemporaneous period – the same hour as the announcement of a message, and the post-announcement period – one hour after the hour of the announcement of a message. I find effect of news on prices in the preannouncement period, indicating that private information exists and is being used for trading on the intra-day market.
    Keywords: Private information; Public information; Non-scheduled announcements; Intra-day electricity market; Nord Pool; UMMs
    JEL: G14 L94
    Date: 2015–03–27
  3. By: Silvia Martinez Romero; Wendy Hughes
    Keywords: Energy - Energy Resources Development Energy Technology and Transmission Energy Policies and Economics Energy - Energy and Natural Resources Energy - Energy Markets Energy - Energy Production and Transportation
    Date: 2015–02
  4. By: ZhongXiang Zhang (School of Economics, Fudan University)
    Abstract: The Chinese central government has approved the seven pilot carbon trading schemes. These seven pilot regions are deliberately selected to be at varying stages of development and are given considerable leeway to design their own schemes. These pilot trading schemes have features in common, but vary considerably in their approach to issues such as the coverage of sectors, allocation of allowances, price uncertainty and market stabilization, potential market power of dominated players, use of offsets, and enforcement and compliance. This article explains why China opts for emissions trading, rather than carbon or environmental taxes at least initially, discusses the key common and varying features of these carbon trading pilots and their first-year performance, draws the lessons learned, discusses the potential pathways for evolution of regional pilot carbon trading schemes into a nationwide carbon trading scheme, and raises fundamental issues that must be addressed in order to make such an emissions trading scheme to work reliably and effectively and with an increasingly expanded coverage and scope Keywords: Pilot carbon trading schemes; environmental taxes; compliance; carbon offsets; energy prices; China
    JEL: H23 O13 P28 Q43 Q48 Q52 Q54 Q58
    Date: 2015–04
  5. By: Gavenas, Ekaterina (School of Economics and Business, Norwegian University of Life Sciences); Rosendahl, Knut Einar (School of Economics and Business, Norwegian University of Life Sciences); Skjerpen, Terje (Research Department, Statistics Norway, Oslo, Norway)
    Abstract: Emissions from oil and gas extraction matter for the lifecycle emissions of fossil fuels, and account for significant shares of domestic emissions in many fossil fuel exporting countries. In this study we investigate empirically the driving forces behind CO2-emission intensities of Norwegian oil and gas extraction, using detailed field-specific data that cover all Norwegian oil and gas activity. We find that emissions per unit extraction increase significantly as a field’s extraction declines. Moreover, emission intensities increase significantly with a field’s share of oil in total oil and gas reserves. We also find some indication that oil and CO2-prices may have influenced emission intensities on the Norwegian continental shelf.
    Keywords: CO2-emissions; Oil and gas extraction; Panel data estimation
    JEL: C23 L71 Q54
    Date: 2015–03–30
  6. By: Böhringer, Christoph (Department of Economics, University of Oldenburg, Germany); Bye, Brita (Statistics Norway, Research Department); Fæhn, Taran (Statistics Norway, Research Department); Rosendahl, Knut Einar (School of Economics and Business, Norwegian University of Life Sciences)
    Abstract: Climate effects of unilateral carbon policies are undermined by carbon leakage. To counteract leakage and increase global cost-effectiveness carbon tariffs can be imposed on the emissions embodied in imports from non-regulating regions. We present a theoretical analysis on the economic incentives for emission abatement of producers subjected to carbon tariffs. We quantify the impacts of different carbon tariff designs by an empirically based multi-sector, multi-region CGE model of the global economy. We find that firm-targeted tariffs can deliver much stronger leakage reduction and higher efficiency gains than tariff designs operated at the industry level. In particular, because the exporters are able to reduce their carbon tariffs by adjusting emissions, their competitiveness and the overall welfare of their economies will be less randomly and less adversely affected than in previously studied carbon tariff regimes. This beneficial distributional impact could facilitate a higher degree of legitimacy and legality of carbon tariffs.
    Keywords: carbon leakage; border carbon adjustment; carbon tariffs; computable general equilibrium (CGE)
    JEL: D61 H20 Q43 Q54
    Date: 2015–03–30
  7. By: Xiong, Wen Professor; Zhang, Yuanyuan PhD; Chen, Xiaohong Professor; Jiang, Chao
    Abstract: Being a public resource, the roadway space was distributed between different road users based on the Passenger-Car-Unit (PCU) concept. However, this concept tends to under estimate the capacity of public transportation and non-motorized travel. To improve the traditional car-oriented design to become more human-oriented, this study proposed a Passing-passenger-unit (PPU) and the method to observe the PPU in roadway level and area level. The PPU data were collected for urban arterials and residential areas in China to test the method and to compare the right-of-way distribution at different types of locations. Results showed that the PPU revealed the true efficiency of the facility carrying passengers. Using PPU would tell a different story about the facility or system compared to using PCU. Additionally, using PPU to analyze the right-of-way for the roadway or community could offer guidance for improving pedestrian and bicyclist environment.
    Keywords: Engineering, Passenger-Car-Unit, Passing-Passenger-Unit, Passing-Passenger-Transport, Public Transit, Right-of- way
    Date: 2014–08–01
  8. By: Gabriel M. Ahlfeldt; Arne Feddersen
    Abstract: We analyze the economic impact of the German high-speed rail (HSR) connecting Cologne and Frankfurt, which provides plausibly exogenous variation in access to surrounding economic mass. We find a causal effect of about 8.5% on average of the HSR on the GDP of three counties with intermediate stops. We make further use of the variation in bilateral transport costs between all counties in our study area induced by the HSR to identify the strength and spatial scope of agglomeration forces. Our most careful estimate points to an elasticity of output with respect to market potential of 12.5%. The strength of the spillover declines by 50% ever 30 minutes of travel time, diminishing to 1% after about 200 minutes. Our results further imply an elasticity of per-worker output with respect to economic density of 3.8%, although the effects seem driven by worker and firm selection.
    Keywords: Accessibility, agglomeration, high-speed rail, market potential, transport policy
    JEL: R12 R28 R38 R48
    Date: 2015–03
  9. By: Filomena Garcia (Indiana University and ISEG/UECE); Cecilia Vergari (University of Bologna)
    Abstract: Abstract: We determine the incentives for compatibility provision of firms that produce network goods with different intrinsic qualities. We consider the case in which both firms have the power to veto compatibility and the case in which none has this power. We obtain that if consumers have a strong preference for the network, there are multiple equilibria in pricing and consumer decisions. We show that in some equilibria, it is the high quality firm that invests in compatibility, whereas in others, the low quality fi rm triggers compatibility. The socially optimal compatibility level is zero, except under strong network effects, where one of the equilibria has all consumers buying the low quality good. In this case, a partial level of compatibility is optimal. Comparison between the privately and the socially optimal levels of compatibility depends on whether or not rms have veto power over compatibility.
    Keywords: Compatibility, vertical
    Date: 2015–05
  10. By: Prudence Dato (IREGE, University Savoie Mont Blanc.)
    Abstract: In this paper, we analyze the optimal energy transition of a two-sector economy (energy and final goods) with exhaustible oil reserves, a renewable source of energy and a pollution threat. The latter corresponds to a pollution threshold above which a part of the capital is lost (following flooding for instance). Part of the energy is used as energy services by a representative consumer through a CRRA utility function and the other part is used as input in a Leontief production function to produce final goods. Moreover, we assume that both energy sources are complementary. We use the optimality conditions as in Boucekkine et al. (2013) to show that the optimal energy transition path may correspond to a corner regime in which the economy starts using both resources, then crosses the pollution threshold and therefore loses a part of its capital. At the end, the economy never adopts only renewable energy. This result is in line with the asymptotic energy transition arguments stating that the transition to "clean" energy may happen only in the long run. We extend the present model to allow for additional investment in energy saving technologies. Our main results show that this additional investment favours the energy transition in the sense that it increases the time within which the economy may experience the catastrophe and the welfare of the society. For policy implications, economic instruments such as taxes on "dirty" energy, subsidies on "clean" energy or incentives for energy saving technologies need to be implemented in order to promote the energy transition. But those economic instruments should be carefully designed in line with the asymptotic energy transition result.
    Keywords: Energy, pollution, irreversibility, switch
    JEL: Q30 Q53 C61
    Date: 2015–02
  11. By: Jain, Rekha; Raghuram, G.
    Abstract: The telecommunications sector has emerged as one of the key sectors that have put the Indian economy on a revival path. Proactive policies such as opening up the sector to private players and competition, unbundling the policy, regulatory and operational roles of the government, removal of restrictions on foreign investments coupled with viewing reforms as a continuous process created an environment conducive to growth. These reforms enabled induction of new technologies. In this paper, we examine the lessons of reforms of the Indian telecom sector. We first examine where the sector is in terms of its impact on service provision and to the economy in relation to the past. Then we outline the sector structure examining the role and relationships of different players. Next, we provide the roadmap of reforms carried out over two decades. From this, we abstract the enabling principles that drove the reform process and bring out lessons for other infrastructure sectors.

This nep-reg issue is ©2015 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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