nep-reg New Economics Papers
on Regulation
Issue of 2015‒08‒30
thirteen papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Quality Uncertainty and the Market for Renewable Energy: Evidence from German Consumers By Rommel, Jens; Sagebiel, Julian; Müller, Jakob R.
  2. An econometric analysis of electricity demand response to price changes at the intra-day horizon: The case of manufacturing industry in West Denmark By Møller, Niels Framroze; Møller Andersen, Frits
  3. Electricity Sector Demand for Natural Gas in the United States By Hartley, Peter R.; Medlock, Kenneth B., III; Rosthal, Jennifer
  4. Energy sector investment modeling under uncertainty for RA from the view of energy security By Ani Khalatyan
  5. Renewable energy policy: the Italian experience By Teresa Romano
  6. ANTITRUST VERSUS INDUSTRIAL POLICIES, ENTRY AND WELFARE By Guy Meunier; Jean-Pierre Ponssard; Francisco Ruiz-Alizeda
  7. Energy Sector Innovation and Growth By Hartley, Peter; Medlock, Kenneth B., III; Temzelides, Ted; Zhang, Xinya
  8. The Distributional Effects of U.S. Clean Energy Tax Credits By Severin Borenstein; Lucas W. Davis
  9. The Housing Market Impacts of Shale Gas Development By Muehlenbachs, Lucia Anna; Spiller, Elisheba; Timmins, Christopher
  10. Multiproduct Monopoly Made Simple By Mark Armstrong; John Vickers
  11. Do Environmental Regulations Increase Bilateral Trade Flows? By Tsurumi, Tetsuya; Managi, Shunsuke; Hibiki, Akira
  12. The Effects of Road Pricing on Driver Behavior and Air Pollution By Matthew Gibson; Maria Carnovale
  13. A Latin lens on energy markets By Frank Wolak

  1. By: Rommel, Jens; Sagebiel, Julian; Müller, Jakob R.
    Abstract: Consumers can choose from a wide range of electricity supply contracts, including green power options. Electricity produced from renewable energy involves information asymmetries. With a sample of more than 2,000 German electricity consumers, we tested the proposition of a “lemon market” for renewable energy in a discrete choice experiment. Specifically, we found that, compared to investor-owned firms, additional willingness-to-pay (WTP) for renewable energy is approximately double when offered by cooperatives or municipally-owned electricity utilities. Consumers who are experienced with switching suppliers have an additional WTP of one Eurocent per kilowatt hour for cooperatives and two Eurocents for public enterprises. The results demonstrate that organizational transformation in dynamically-changing electricity markets is not only driven by political initiatives but also by consumers’ choices on the market. Public policy may reduce information asymmetries by promoting government labeling of green energy products.
    Keywords: Cooperatives; Discrete Choice Experiment; Germany
    JEL: D12 L33 L94
    Date: 2015
  2. By: Møller, Niels Framroze; Møller Andersen, Frits
    Abstract: The use of renewable energy implies a more variable supply of power. Market efficiency may improve if demand can absorb some of this variability by being more flexible, e.g. by responding quickly to changes in the market price of power. To learn about this, in particular, whether demand responds already within the same day, we suggest an econometric model for hourly consumption and price time series. This allows for multi-level seasonality and that information about day-ahead prices does not arrive every hour but every 24th hour (as a vector of 24 prices). We confront the model with data from the manufacturing industry of West Denmark (2007-2011). The results clearly suggest a lack of response. The policy implication is that relying exclusively on hourly price response by consumers for integrating volatile renewable electricity production is questionable. Either hourly price variation has to increase considerably or demand response technologies be installed.
    Keywords: Demand Response, Electricity Demand, Day-ahead prices, Econometrics, RegARIMA
    JEL: C22 Q0 Q4 Q41
    Date: 2015–08–18
  3. By: Hartley, Peter R. (Rice University); Medlock, Kenneth B., III (Rice Univesrity); Rosthal, Jennifer (Rice University)
    Abstract: We examine determinants of the natural gas share in power generation for the NERC regions in the US. Our results indicate that plant and grid-level fuel-switching, technology in generation, installed capacity and weather all affect the natural gas share of energy input into power generation. Furthermore, we argue that fuel-switching is likely an important demand-side factor in establishing a long run relationship between the prices of petroleum products and natural gas. We estimate two specifications--a translog specification for expenditure share and a double logarithmic transformation of gas-fired capacity utilization--because our analysis calls into question the validity of the translog specification for analyzing fuel shares in the power generation sector.
    Date: 2014
  4. By: Ani Khalatyan
    Abstract: The Armenian economy has been growing strongly in recent years. The country has successfully implemented a comprehensive stabilisation and a structural reform program in energy sector. Although now Armenia almost completely depends on imported energy. The most domestically produced primary energy is electricity from hydroelectric plants and one nuclear power plant. However, there are serious challenges: a. Sufficient electricity service b. Energy safety c. Maintenance of electricity service availability for consumers at the same time providing the financial vitality of the sector.
    Date: 2014–11
  5. By: Teresa Romano
    Abstract: Since worldwide concerns about climate change were made official by the Kyoto Protocol at the end of 1997, renewable energy sources (RES) have been receiving increasingly more attention by policy makers. Teresa Romano investigates.
    Date: 2014–09–01
  6. By: Guy Meunier (INRA - Institut national de la recherche agronomique (INRA), Department of Economics, Ecole Polytechnique - CNRS - Polytechnique - X); Jean-Pierre Ponssard (CNRS, Department of Economics, Ecole Polytechnique - CNRS - Polytechnique - X); Francisco Ruiz-Alizeda (Department of Economics, Ecole Polytechnique - CNRS - Polytechnique - X)
    Abstract: In industries with large sunk costs, the investment strategy of competing firms depends on the regulatory context. We consider ex-ante industrial policies in which the sunk cost may be either taxed or subsidized, and antitrust policies which could be either pro-competitive (leading to divestiture in case of high ex-post protability) or lenient (allowing mergers in case of low ex-post protability). Through a simple entry game we completely characterize the impact of these policies and examine their associated dynamic trade-offs between the timing of the investment, the ex-post benefits for the consumers, and the possible duplication of fixed costs. We find that merger policies are dominated by ex-ante industrial policies, whereas the latter are dominated by divestiture policies only under very special circumstances.
    Date: 2015–02–16
  7. By: Hartley, Peter (Rice University and University of Western Australia); Medlock, Kenneth B., III (Rice University); Temzelides, Ted (Rice University); Zhang, Xinya (Rice University)
    Abstract: We study the optimal transition from fossil fuels to renewable energy in a neoclassical growth economy with endogenous technological progress in energy production from fossil fuels and renewable energy sources. Innovations keep fossil energy cost under control even as increased exploitation raises mining costs. Nevertheless, the economy eventually transitions to renewable energy. Learning-by-doing in renewable energy production implies that it is optimal to transition to renewable energy before the cost of fossil fuels reaches parity with renewable energy costs. Since energy costs escalate as the transition approaches, growth of consumption and output decline sharply around the transition. The energy shadow price remains more than double current values for over 75 years around the switch time, resulting in a continued drag on output and consumption growth. The model highlights the important role that energy can play in influencing economic growth.
    Date: 2014
  8. By: Severin Borenstein; Lucas W. Davis
    Abstract: Since 2006, U.S. households have received more than $18 billion in federal income tax credits for weatherizing their homes, installing solar panels, buying hybrid and electric vehicles, and other "clean energy" investments. We use tax return data to examine the socioeconomic characteristics of program recipients. We find that these tax expenditures have gone predominantly to higher-income Americans. The bottom three income quintiles have received about 10% of all credits, while the top quintile has received about 60%. The most extreme is the program aimed at electric vehicles, where we find that the top income quintile has received about 90% of all credits. By comparing to previous work on the distributional consequences of pricing greenhouse gas emissions, we conclude that tax credits are likely to be much less attractive on distributional grounds than market mechanisms to reduce GHGs.
    JEL: D30 H23 H24 H50 Q41 Q48
    Date: 2015–07
  9. By: Muehlenbachs, Lucia Anna (Resources for the Future); Spiller, Elisheba; Timmins, Christopher
    Abstract: Using data from Pennsylvania and an array of empirical techniques to control for confounding factors, we recover hedonic estimates of property value impacts from nearby shale gas development that vary with water source, well productivity, and visibility. Results indicate large negative impacts on nearby groundwaterdependent homes, while piped-water-dependent homes exhibit smaller positive impacts, suggesting benefits from lease payments. Results have implications for the debate over regulation of shale gas development.
    Keywords: shale gas, groundwater, property values, hedonic models, nearest neighbor matching, differences-in-differences, triple differences
    JEL: Q32 Q33 Q50 Q53
    Date: 2013–12–09
  10. By: Mark Armstrong; John Vickers
    Abstract: We present a tractable class of multiproduct monopoly models that involve a generalized form of homothetic preferences. This class includes CES, linear and logit demand. Within the class, profit-maximizing quantities are proportional to efficient quantities. We discuss cost-passthrough, including cases where optimal prices do not depend on other products’costs. We show how the analysis can be extended to Cournot oligopoly. Finally, we discuss optimal monopoly regulation when the firm has private information about its vector of marginal costs, and show that if the probability distribution over costs satisfies an independence property, then optimal regulation leaves relative price decisions to the firm.
    Keywords: Multiproduct pricing, homothetic preferences, cost passthrough, monopoly regulation, multidimensional screening.
    JEL: D42 D82 L12 L51
    Date: 2015–08–20
  11. By: Tsurumi, Tetsuya; Managi, Shunsuke; Hibiki, Akira
    Abstract: The argument that stringent environmental regulations are generally thought to harm export flows is crucial when determining policy recommendations related to environmental preservation and international competitiveness. By using bilateral trade data, we examine the relationships between trade flows and various environmental stringency indices. Previous studies have used energy intensity, abatement cost intensity, and survey indices for regulations as proxies for the strictness of environmental policy. However, they have overlooked the indirect effect of environmental regulations on trade flows. If the strong version of the Porter hypothesis is confirmed, we need to consider the effect of environmental regulation on GDP, because GDP induced by environmental regulation affects trade flows. The present study clarifies the effects of regulation on trade flows by distinguishing between the indirect and direct effects. Our results indicate an observed non-negligible indirect effect of regulation, implying that the overall effect of appropriate regulation benefits trade flows.
    Keywords: Environmental regulations, Porter hypothesis, Trade and environment, Gravity model
    JEL: F18 Q56 Q59
    Date: 2015–08–28
  12. By: Matthew Gibson (Williams College); Maria Carnovale (Duke University)
    Abstract: Exploiting the natural experiment created by an unanticipated court injunction, we evaluate driver responses to road pricing. We find evidence of intertemporal substitution toward unpriced times and spatial substitution toward unpriced roads. The effect on traffic volume varies with public transit availability. Net of these responses, Milan's pricing policy reduces air pollution substantially, generating large welfare gains. In addition, we use long-run policy changes to estimate price elasticities.
    Keywords: road pricing, traffic policy, air pollution
    Date: 2015–05
  13. By: Frank Wolak
    Abstract: Stanford University’s Frank Wolak looks at the pros and cons of Latin-American-style cost-based dispatch and pricing on short-term energy and operating reserve markets.
    Date: 2013–11–01

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