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on Regulation |
| By: | Kiesel, Ruediger; Paraschiv, Florentina |
| Abstract: | The trading activity in the German intraday electricity market has increased significantly over the last years. This is partially due to an increasing share of renewable energy, wind and photovoltaic, which requires power generators to balance out the forecasting errors in their production. We investigate the bidding behavior in the intraday market by looking at both last prices and continuous bidding, in the context of a fundamental model. A unique data set of 15-minute intraday prices and intraday-updated forecasts of wind and photovoltaic has been employed and price bids are modelled by prior information on fundamentals. We show that intraday prices adjust asymmetrically to both forecasting errors in renewables and to the volume of trades dependent on the threshold variable demand quote, which reflects the expected demand covered by the planned traditional capacity in the day-ahead market. The location of the threshold can be used by market participants to adjust their bids accordingly, given the latest updates in the wind and photovoltaic forecasting errors and the forecasts of the control area balances. |
| Keywords: | Intraday Electricity Prices, Bidding Behavior, Renewable Energy, Forecasting Model |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:usg:sfwpfi:2015:21&r=reg |
| By: | Marie Hyland; Stefanie Haller |
| Abstract: | We estimate partial- and total-fuel substitution elasticities between electricity, gas and oil, using firm-level data. We find that, based on the partial elasticity measure, electricity is the least-responsive fuel to changes in its own price and in the price of other fuels. The total elasticity measure, which adjusts the partial elasticity for changes in aggregate energy demand induced by individual fuel price changes, reveals that the demand for electricity is much more price responsive than the partial elasticity suggests. Our results illustrate the importance of accounting for the feedback effect between interfactor and interfuel substitution elasticities when considering the effectiveness of environmental taxation. We use the estimated elasticities to simulate the impact of a e15/tCO2 carbon tax on average energy-related CO2 emissions. The carbon tax results in a small reduction in CO2 emissions from oil and gas use, but this reduction is partially offset by an increase in emissions due to increased electricity consumption by some firms. |
| Keywords: | Fuel substitution; Firm-level data; Environmental taxation |
| JEL: | D24 Q38 Q41 Q48 Q58 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:wpaper:201522&r=reg |
| By: | Simone Moriconi (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Pierre M. Picard; Skerdilajda Zanaj |
| Abstract: | TThis paper studies competition in commodity taxation and product market regula- tion between trading partner countries. We present a two-country general equilibrium model in which destination-based commodity taxes finance public goods, and prod- uct market regulation affects both the number of firms in the market and product diversity. We provide empirical evidence based on data for 21 OECD countries over the 1990-2008 period. Our results suggest that commodity taxation and product mar- ket regulation are interdependent policies. Theoretically and empirically we find an absence of strategic interaction in commodity taxation between governments. Further- more, we show that domestic regulation has a negative effect on domestic commodity taxation. Finally, we demonstrate theoretically and show empirically that product market regulation is a strategic complementary policy. |
| Keywords: | Regulation, commodity tax, strategic interactions. |
| JEL: | F0 H1 H7 H87 L5 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie1:def034&r=reg |
| By: | Hübler, Michael; Schenker, Oliver; Fischer, Carolyn |
| Abstract: | This paper studies policy instruments that correct insufficient learning-by-doing (LbD) and research and development (R&D) of renewable electricity technologies and insufficient investments in energy efficiency (EE) in the presence of carbon pricing. The theoretical model analysis shows how to re-adjust the first-best in second-best situations, in which one of the policy instruments is restricted. Calibrated to the European power sector, the first-best choice of all instruments reduces the climate policy cost by one third. Feed-in tariffs turn out to be good substitutes for LbD, but not for R&D or EE subsidies. |
| Keywords: | second-best,climate policy,energy policy,feed-in tariff,power sector,EU |
| JEL: | C61 O33 Q48 Q54 Q55 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:15079&r=reg |
| By: | Ana Ramos (Rede (Universidade de Vigo) and Economics for Energy); Alicia Pérez-Alonso (Universidade de Vigo and Economics for Energy); Susana Silva (Universidade Lusíada, CefUP and Economics for Energy) |
| Abstract: | Informational instruments such as energy performance certificates have been widely adopted by many governments during the last decade to promote energy efficiency in the residential sector. The objective of these instruments is to reduce the informational and behavioural failures that avoid consumers from taking efficient decisions regarding dwelling energy efficiency. The European Commission approved in 2012 the Energy Performance of Buildings Directive, which states that a certificate must be made available to buyers or tenants in the moment the dwelling is sold or rented out. Despite the rapid diffusion and interest this type of instruments have raised, little is known about its effectiveness. We provide the first analysis on consumersÕ willingness to pay for energy performance certificates in a Southern European Country: Portugal. Portugal is an interesting case study because this Directive is fully and properly implemented, and the level of consumerÕs awareness is high. We construct a database that contains a large number of dwelling attributes, including energy efficiency characteristics, such as heating or air conditioning systems, gas or solar energy sources. These characteristics allow us to isolate the effect of the certificate on the price. We use the two-step Heckman procedure to estimate a hedonic price function for dwellings. Our results show that Portuguese consumers have a high valuation for high rated dwellings. |
| Keywords: | Keywords: Energy Efficiency; Incomplete Information; Energy Performance Certificate; Residential Sector; Hedonic Price Model; Portugal. |
| JEL: | Q41 Q58 R21 C25 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:efe:wpaper:02-2015&r=reg |
| By: | Christoph Böhringer; Knut Einar Rosendahl; Halvor Briseid Storrøsten (Statistics Norway) |
| Abstract: | Unilateral climate policy induces carbon leakage through the relocation of emission-intensive and trade-exposed industries to regions with no or more lenient emission regulation. Both analytical and numerical studies suggest that emission pricing combined with border carbon adjustment is a second-best instrument, and more cost-effective than output-based rebating, in which case domestic output is indirectly subsidized. No country has so far imposed border carbon adjustment, while variants of output-based rebating have been implemented. In this paper we show that combining output-based rebating for emission-intensive and trade-exposed goods with a consumption tax on the same goods can be equivalent with border carbon adjustment. Moreover, we demonstrate that it is welfare improving for a region which has already implemented emission pricing along with outputbased rebating to also introduce such a consumption tax. We conclude that supplementing outputbased rebating with a consumption tax constitutes smart hedging against carbon leakage: Compared to output-based rebating stand-alone it constitutes a robust strategy for improving cost-effectiveness of unilateral climate policy; compared to border carbon adjustment it limits the risks of potentially detrimental trade disputes. |
| Keywords: | Carbon leakage; output-based rebating; border carbon adjustment; consumption tax |
| JEL: | D61 H2 Q54 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:822&r=reg |
| By: | Emiko Inoue |
| Abstract: | Innovation is now expected to play an important role to overcome difficult issues of climate change more than ever. To examine how to induce innovation, the relationship between environmental policy and innovation has been focused on. Still few researches, however, have examined the impact of the EU emission trading scheme on innovation based on econometric analysis. This study scrutinises how corporate responses towards the EU ETS influence R&D investments of EU major corporations. Using firm-level panel data, which is constructed based on the data of corporate responses to the Carbon Disclosure Project, EU Industrial R&D Investment Scoreboard, and corporationsf CSR reports, I estimate two dynamic panel models using system GMM estimator. Endogeneity issue is addressed in these models. The results show that corporations which have a policy or a strategy to comply with the EU ETS or to react proactively before being regulated by the EU ETS are more likely to encourage R&D investment. The process of reacting towards the EU ETS may provide an opportunity for corporations to recognise the importance of R&D investment for their future strategy. |
| Keywords: | Climate change; EU ETS; R&D investment |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:kue:epaper:e-15-008&r=reg |
| By: | Peter Michaelis (University of Augsburg, Department of Economics); Thomas Ziesemer (University of Augsburg, Department of Economics) |
| Abstract: | We consider a two-periods-model of differentiated duopoly. Firms produce an en-ergy consuming household durable differentiated by its energy efficiency. Consumers differ by the weight they apply to their future energy costs when deciding which product to buy. In line with the Japanese Top Runner Program, the regulator introduces a minimum efficiency standard in period t=2 which is fixed according to the efficiency of the product supplied by the high efficiency firm in t=1. We show that in t=1 both firms supply lower efficiency products and the high efficiency firm gains in market share and profits. In t=2 these effects are reversed. Calculated over both periods, total energy consumption does not change. Although there is no ecological effect, total welfare increases because price competition becomes tighter and the cost savings accruing to the consumers exceed the firms’ losses in profits. |
| Keywords: | energy efficiency standards, product differentiation, duopoly, regulation |
| JEL: | L13 Q48 Q58 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:aug:augsbe:0325&r=reg |
| By: | Heindl, Peter |
| Abstract: | This paper empirically investigates the impact of transaction costs for monitoring, reporting, and verification (MRV) of emissions on companies regulated by the EU Emissions Trading System (EU ETS) in Germany. Based on a unique panel dataset, we investigate if MRV costs are dependent on the amount of annual emissions of regulated companies and if there are differences in transaction costs between economic sectors. The results indicate that administrative costs are dependent on the amount of annual emissions for larger companies which has implications for the economic efficiency of the EU ETS. The most important finding, however, is that there are significant differences in MRV transaction costs dependent on the 'type' and 'size' of companies. This implies the existence of considerable economies of scale. Overall, the EU ETS could benefit from reforms by means of a push towards upstream regulation as this would likely increase administrative efficiency. |
| Keywords: | EU Emissions Trading System,Cap-and-Trade,Transaction Costs,Monitoring, Reporting, and Verification |
| JEL: | D22 D23 Q58 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:15076&r=reg |
| By: | Ana Ramos (Rede (Universidade de Vigo)); Alberto Gago (Rede (Universidade de Vigo)); Xavier Labandeira (Rede (Universidade de Vigo) and European University Institute); Pedro Linares (Universidad Pontificia Comillas) |
| Abstract: | In spite of the large potential and existing efforts to foster energy efficiency in the residential sector, much remains to be achieved. This may be partially due to the many barriers and market failures faced by energy efficiency, which are even greater in the residential sector. In particular, informational failures seem to be pervasive and relevant in this area. Addressing these issues requires specific policy instruments and strategies. This paper reviews the empirical evidence on the effectiveness of such instruments, focusing on energy certificates, feedback programs, and energy audits. Results show that energy certificates and feedback programs can be effective, but only if they are carefully designed. Yet energy audits seem to have little effect on efficiency. In addition, the paper points out the large potential for new instruments as well as combinations of existing ones. |
| Keywords: | Energy efficiency, information, behavior. |
| JEL: | Q40 Q48 Q58 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:efe:wpaper:04-2014&r=reg |
| By: | Attar, Andrea; Campioni, Eloisa; Piaser, Gwenaël |
| Abstract: | We study games in which several principals design incentive schemes in the presence of privately informed agents. Competition is exclusive: each agent can participate with at most one principal, and principal-agents corporations are isolated. We analyze the role of standard incentive compatible mechanisms in these contexts. First, we provide a clarifying example showing how incentive compatible mechanisms fail to completely characterize equilibrium outcomes even if we restrict to pure strategy equilibria. Second, we show that truth-telling equilibria are robust against unilateral deviations toward arbitrary mechanisms. We then consider the single agent case and exhibit sufficient conditions for the validity of the revelation principle. |
| Keywords: | Competing Mechanisms, Exclusive Competition, Incomplete Information. |
| JEL: | D82 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:29906&r=reg |
| By: | Giuranno, Michele; Di Liddo, Giuseppe |
| Abstract: | This paper addresses the issue of inter-jurisdictional cooperation when incumbents are pure rent seekers. Asymmetric fiscal needs bias yardstick competition as in Allers (2012). While incumbents gain control over the political yardstick competition by cooperating, this bias leads to asymmetric rent share. Cooperation is also intrinsically unstable. Furthermore, incentives, such as matching grants or economies of scale, may enhance cooperation, but will not increase political accountability. |
| Keywords: | Decentralization; expenditure needs disparities; municipal cooperation. |
| JEL: | D72 H77 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:uca:ucapdv:180&r=reg |