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on Regulation |
| By: | Carlo Cambini; Wolfgang Briglauer; Michał Grajek |
| Abstract: | Footnotes, references, and the technical annex can be found in the PDF version of this publication. Highlights Fibre-based next generation access (NGA) roll-out across the European Union is one of the goals of the European Commission’s Digital Agenda strategy. By enabling entirely new broadband services, NGA networks have the potential to trigger productivity gains on a massive scale. There remains considerable uncertainty, however, about how the roll-out goal can best be achieved. The underlying differences between the economics of copper-based and new fibre-based broadband infrastructures should lead to a revision of the regulatory framework for telecommunications markets. While the current regulatory measures have been useful in the past decade to sustain competition and facilitate entry into a market with already-existing infrastructures, the need to create new, much faster broadband networks calls for a rethink of the scope and strictness of regulation. 1 Introduction Next generation access (NGA) networks, a fibre-based high-speed broadband infrastructure, are a general purpose technology with the potential to trigger productivity gains on a massive scale. These gains might take years to accrue, because new applications and new organisational and production designs that use NGA networks need time to be developed. Nevertheless, we consider wide NGA infrastructure roll-out to be welfare enhancing and that it should therefore be an objective of the European Union. This is consistent with the view taken by the European Commission. The Commission’s Digital Single Market strategy, adopted on 6 May 2015, promises that in 2016 an ambitious overhaul of the telecoms regulatory framework will be proposed, and will focus, among other aims, on investment in high-speed broadband infrastructure (European Commission, 2015). EU markets for electronic communications networks and services are regulated according to the 2002 eCommunications framework. Among its main provisions is the mandated sharing of telecommunications infrastructure, which allows entrants to compete with incumbents. The eCommunications framework was created for copper-based legacy networks, but has been extended to cover NGA networks, which provide users with radically improved broadband access to data, based on fibre-optic cable technologies. Academic research shows that, among various cost and demand side factors that have an impact on the deployment of NGA networks, regulatory access policies play a crucial role. In this Policy Contribution, we discuss how these regulations – devised at EU level and implemented at national level – might affect the deployment of NGA networks. We start with an analysis of recent NGA trends in EU member states, and assess if the European Commission’s policy goals are being met1. We then review the experience with broadband deployment in the EU and other selected economies. We discuss the differences and similarities in the economics of the ‘old’ broadband (using legacy networks based on copper and coaxial cables) and the ‘new’ broadband (using NGA networks), and assess the extent to which lessons learned about regulation of legacy networks can be transferred to NGA networks. We then discuss the current regulatory framework for NGA networks and in Box 1 on page 9 highlight case studies of EU member states that did particularly well in terms of NGA deployment. This enables us to highlight the key trade-offs involved in regulation of NGA networks and to formulate a set of recommendations to policymakers. Our key finding is that the underlying differences between the economics of the ‘old’ and the ‘new’ broadband infrastructures should lead to a revision of the current regulatory framework for telecommunications markets. While the regulatory framework for copper-based networks was useful in the past decade to sustain competition in a market with already existing infrastructures, the need to create new broadband networks calls for a rethink. 2 NGA coverage, penetration and take-up rates Figure 1 shows NGA coverage and NGA penetration for 25 EU member states. NGA coverage is measured by the total number of lines that enable fast broadband internet access that are available to homes or businesses (‘homes passed’2) . Network coverage thus refers to the number of consumers that in principle have access to fast broadband. NGA penetration refers to the actual number of NGA subscribers. Figure 1 captures almost the entire period of NGA deployment in EU member states and shows that the coverage and the penetration follow a more or less dynamic diffusion process. Even though some EU member states do particularly well in terms of NGA deployment, as Figures 1 and 2 show, Europe lags behind a number of non-European nations, including Japan, Korea and the United States (FTTH Council Europe, 2015; Yoo, 2014; OECD, 2013). In order to stimulate greater NGA coverage and penetration, the European Commission’s Digital Agenda strategy, of which the Digital Single Market plan is a part, said that the EU should “ensure that, by 2020, (i) all Europeans have access to much higher internet speeds of above 30 Mbps and (ii) 50 percent or more of European households subscribe to internet connections above 100 Mbps” (European Commission, 2010). |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:bre:polcon:9959&r=reg |
| By: | Roger Fouquet |
| Abstract: | This article investigates how the demand for energy services has changed since the Industrial Revolution. It presents evidence on the income and price elasticities of demand for domestic heating, passenger transport, and lighting in the United Kingdom over the last two hundred years. As the economy developed and energy service prices fell, income elasticities have generally followed an inverse U-shape curve, and price elasticities have generally followed a U-shape curve. However, these general trends also appear to have been affected by energy and technological transitions, which boosted demand (by either encouraging poorer consumers to fully enter the market or offering new attributes of value to wealthier consumers). The evidence presented offers insights that will be helpful for identifying likely future trends in energy use and carbon dioxide emissions, and for developing long-term climate policies. |
| Keywords: | demand elasticity; energy use; income; price dynamics |
| JEL: | D12 N73 N74 Q41 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:59070&r=reg |
| By: | Frank Jotzo (Crawford School of Public Policy, The Australian National University); Salim Mazouz (EcoPerspectives Pty Ltd) |
| Abstract: | In this paper we propose a market mechanism for regulated exit of highly emissions intensive power stations from the electricity grid. The starting point is that there is surplus capacity in coal fired power generation in Australia. In the absence of a carbon price signal, black coal generation capacity may leave the market instead of high emitting brown coal power stations. We lay out options for a mechanism of regulated power station closure using a market mechanism. Plants bid competitively over the payment they require for closure, the regulator chooses the most cost effective bid, and payment for closure is made by the remaining power stations in proportion to their carbon dioxide emissions. This could overcome adverse incentive effects for plants to stay in operation in anticipation of payment for closure and solve the political difficulties and problems of information asymmetry that plague government payments for closure and direct regulation for exit. We explore the issues theoretically and provide empirical illustrations. These suggest that closure of a brown coal fired power station in Australia could yield emissions savings at costs that are lower than the social benefits. The analysis in this paper is applicable to other countries. |
| Keywords: | greenhouse gas emissions; electricity; brown coal; early retirement; regulation; market mechanism; contract for closure |
| JEL: | Q48 Q58 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:een:ccepwp:1510&r=reg |
| By: | Ke Wang; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology); Zhimin Huang |
| Abstract: | China has recently launched its pilot carbon emissions trading markets. Theoretically, heterogeneity in abatement cost determines the efficiency advantage of market based programs over command and control policies on carbon emissions. This study tries to answer the question that what will be the abatement cost savings or GDP loss recoveries from carbon emissions trading in China from the perspective of estimating the potential gains from carbon emissions trading. A DEA based optimization model is employed in this study to estimate the potential gains from implementing two carbon emissions trading schemes compared to carbon emissions command and control scheme in China. These two schemes are spatial tradable carbon emissions permit scheme and spatial-temporal tradable carbon emissions permit scheme. The associated three types of potential gains, which are defined as the potential increases on GDP outputs through eliminating technical inefficiency, eliminating suboptimal spatial allocation of carbon emissions permit, and eliminating both suboptimal spatial and temporal allocation of carbon emissions permit, are estimated by an ex post analysis for China and its 30 provinces over 2006-2010. Substantial abatement cost savings and considerable carbon emissions reduction potentials are identified in this study which provide one argument for implementing a market based policy instrument instead of a command and control policy instrument on carbon emissions control in China. |
| Keywords: | Carbon emissions, DEA, Emissions trading, Potential gains, Tradable permit |
| JEL: | Q58 Q40 |
| Date: | 2015–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:biw:wpaper:84&r=reg |
| By: | Michael G. Pollitt and Karim L. Anaya |
| Abstract: | This paper looks at the empirical and theoretical background to high shares of renewables in the electricity system. First we examine what is meant by ‘high shares’ of renewables; next we consider what we mean by electricity ‘markets’; then we discuss what the term ‘cope with’ implies; before returning to the suitability of ‘current’ electricity markets. Second, we turn to three examples of jurisdictions – Germany, the UK and the State of New York in the US - with specific aspirations for decarbonisation and the role of renewables. Each exhibits very different approaches to the way they are adjusting their electricity market design to cope with high shares of renewables. We suggest that a new wave of electricity experiments is beginning around the theme of how to incorporate large shares of intermittent renewable generation in to electricity systems. |
| Keywords: | renewables; electricity markets; Germany; UK; New York |
| JEL: | L94 L98 Q48 |
| Date: | 2015–11–04 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1531&r=reg |
| 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 R38 R48 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:64507&r=reg |
| By: | Mario Mariniello; Francesco Salemi |
| Abstract: | Highlights - Mobile telecommunications markets are an important part of the European Commission’s strategy for the completion of the European Union Digital Single. The use of mobile telecommunications – particularly mobile data access – is growing and becoming an increasingly important input for the economy. - The EU currently does not have a unified mobile telecommunications market. The EU compares favourably to the United States in terms of prices and connection speed, but lags behind in terms of coverage of high-speed 4G wireless connections. -Europe’s long-term goal should be to make data access easier by increasing highspeed wireless coverage while keeping prices down for users. An increase in cross-border competition could help to achieve that goal. - The Commission has two important levers to help stimulate cross-border supply - (a) ensuring competition in intra-country mobile markets in order to provide an incentive for operators to expand into other jurisdictions, and (b) reducing mobile operators’ costs of expansion into multiple EU countries. The further development of policies on international roaming and radio spectrum management will be central to this effort. |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:bre:polcon:7931&r=reg |
| By: | Wesseling , Joeri H. (CIRCLE, Lund University) |
| Abstract: | Transition studies’ understanding of differences in public policy is limited due to its tendency to focus on single-country cases. This paper assesses differences in plug-in electric vehicle (PEV) policies expenditures, comprising RD&D subsidies, infrastructure investments and sales incentives, across 13 countries over the period 2008-2014. I explore three conditions that may influence these policy expenditures. <p>Content and statistical analyses show that national PEV policies differed drastically across countries in intensity and orientation, ranging from a focus on supply-side innovation policy to a focus on demand-side environmental policy. The government’s role across national political economies only explain differences in PEV infrastructure investments, while the government’s EV diffusion targets for 2020 surprisingly do not correlate with any PEV policy. Economic interest in the car industry shows and explains why car countries focus their policy on technology development, and non-car countries on technology diffusion. These findings enhance the understanding of national policies in transitions. |
| Keywords: | innovation policy; demand-side policy; geography of transition; industry support; varieties of capitalism; 2020 target |
| JEL: | H23 H31 O25 O38 Q58 |
| Date: | 2015–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2015_042&r=reg |
| By: | Harrison Fell (Division of Economics and Business, Colorado School of Mines); Harrison Fell (Division of Economics and Business, Colorado School of Mines) |
| Abstract: | This paper looks at whether bribes for electricity connections affect electricity reliability. Using detailed firm-level data, we estimate various specifications based upon repeated cross-sections and means-based pseudo-panels to show that bribes are closely related to poorer electricity reliability. We find that the propensity to bribe for an electricity connection is associated with an increase of 20 power outages per month and a 28% increase in annual sales lost due to power outages on average. The results parallel a tragedy of the commons story: electricity, which exhibits common-pool resource characteristics, suffers from overexploitation as self-interested individual firms rationally bribe for electricity, creating negative impacts in aggregate on the overall quality of the resource. Given the importance of electricity reliability for economic growth and development, the findings imply that improving oversight and enforcement measures at the consumer level targeting the reduction of bribery for electricity connections could contribute to growth and development. |
| Keywords: | corruption, electricty, reliability, quality of government, institutions, common-pool resource |
| JEL: | O1 Q4 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:mns:wpaper:wp201510&r=reg |
| By: | Caroline Stiel; Astrid Cullmann; Maria Nieswand |
| Abstract: | This paper, which is one of the first to estimate productivity in retail electricity for a European country after liberalisation, analyses the effect of ownership and governance structure by using a unique dataset of German electricity retailers from 2003 to 2012. An innovative service production function for the retail sector is derived with labour and external services as the main inputs. A structural model is used with a proxy function for productivity to overcome the endogeneity of input choice. Ownership is controlled for in the law of motion for productivity. The results of the dataset used to validate the model show that firm-level productivity did not increase after 2008 and that ownership had no effect on productivity. The results provide useful insights into the link between ownership and productivity in modern public enterprises after liberalisation. |
| Keywords: | Productivity, structural production function, electricity retail, ownership, governance |
| JEL: | D24 L11 C23 L94 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1531&r=reg |