nep-reg New Economics Papers
on Regulation
Issue of 2016‒05‒14
eleven papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  2. Demand Response in Germany: Technical Potential, Benefits and Regulatory Challenges By Jan Stede
  3. Where does the wind blow? Green preferences and spatial misallocation in renewable energy sector By Yatang Lin
  4. Coordination of Renewable Energy Remuneration Schemes through Information Exchange By Thilo Grau; Karsten Neuhoff
  5. Towards the massification of broadband internet access in Brazil: an application of alternative dispute resolution settlement of administrative proceedings. By Charlita de Freitas, Luciano; Fagundes Ferreira, Flávio; Bernardes da Silva Júnior, Osmar; Azevedo Marques Mello da Silva, João Marcelo; Vilas Boas de Freitas, Igor
  6. Incentives, Efficiency and Quality in Regulated Monopolies under Customer Ownership By Richard Meade
  7. Competitive Dominance of Emission Trading Over Pigouvian Taxation in a Globalized Economy By Seung-Gyu Sim; Hsuan-Chih Lin
  8. An Exploration of a Strategic Competition Model for the European Union Natural Gas Market By Zaifu Yang; Rong Zhang; Zongyi Zhang
  9. Location and Occupancy of Energy Inefficient Residential Properties By Curtis, John; Devitt, Niamh; Whelan, Adele
  10. Policy of energy poverty alleviation and quality of life in Poland By Michal Litwinski
  11. Are Biofuels an Environment-friendly Choice for Transport? A Study from Vietnam By Loan T. Le

  1. By: Li, Fan; Phillips, Michelle
    Abstract: China is currently facing water scarcity issues, which can partially be relieved with improvements in efficiency in its urban water supply sector. Using a manually collected utility-level dataset for 2009-2013, we examine the regulatory context and performance of Chinese urban water utilities, taking into account their operational environment. Our main findings are that: (1) an increase in the number of non-technical staff does not increase output levels, while an increase in the number of technical staff, length of pipe or electricity usage can increase output; (2) customer density and non-household user rates are associated with lower levels of inefficiency (or higher levels of measured efficiency), while outsourcing staff rate, non-revenue water rate, and average piped water pressure do not significantly affect efficiency. These results suggest that Chinese urban water utilities can be improved through performance-based regulation and incentives that take into account the operational environment of utilities.
    Keywords: Chinese water utilities, Stochastic frontier analysis, Operational environment, regulation, performance, Industrial Organization, Production Economics, Resource /Energy Economics and Policy, L95, L51, D24,
    Date: 2017
  2. By: Jan Stede
    Abstract: An increased flexibility of the electricity demand side through demand response (DR) is an opportunity to support the integration of renewable energies. By optimising the use of the generation, transmission and distribution infrastructure, DR reduces the need for costly investments and contributes to system security. There is a significant technical DR potential for load reduction from industrial production processes in Germany, as well as from cross-cutting technologies in industry and the tertiary sector.The availability of demand response as a system resource depends on the underlying type of demand. Already today energy-intensive industries market significant demand capacity in the German minute reserve. The DR literature reveals that there is a potential of several gigawatts of additional capacity available for at least one hour in Germany. Demand can also cover longer periods, but this often requires investment, for example in storage capacity for intermediate products.To enable the effective use and full remuneration of demand response, further improvements in power market design are discussed: (i) Enabling third parties (referred to as Demand Side Management Companies) to help business customers realise their flexibility potential; (ii) creating robust intraday and balancing prices in auction platforms as reference prices for longer-term contracts to stabilise revenue streams of flexibility providers; (iii) it needs to be further assessed whether additional catalysing instruments are necessary to initiate investment in new business processes or storage capacity.
    Date: 2016
  3. By: Yatang Lin
    Abstract: Are "greener" investments less efficient? This paper looks at the location choices by wind power investors. I measures the efficiency loss in this sector due to wrong project location and explore the factors contributing to it. Using extensive information on wind resources, transmission, electricity price and other restrictions that might affect the siting of wind farms, I calculate the predicted profitability of wind power projects for all the possible places across the contiguous US, use it as a counterfactual for profit- maximizing wind power investment and compare it to the actual placement of wind farms. Average predicted profit of wind projects will raise by 47.1% had the 1770 current projects in the continental US been moved to the best 1770 sites. It is also shown that 80% and 42% of this observed deviation can be accounted for by within- state and within-county distortion. I show further evidence that a large proportion of the within-state and within-county spatial misallocation in wind farm siting can be attributable to green investors' “conspicuous generation” behaviour: wind farms in more environmental-friendly counties are more likely to be invested by local and non- profit investors, are closer to cities, are much less responsive to local fundamentals and have significant worse performance ex-post. Surprisingly, the implementation of state policies such as Renewable Portfolio Standard (RPS) and price-based subsidies are related to better within-state locational choices by adding more capacities in the “brown” counties and attract more for-profit investments, leading to improved observed efficiency, while lump-sum subsidies have the opposite or no effects. These findings calls for the attention from policy makers to the non-monetary incentives of renewable investors when determining the allocative efficiency of policies.
    Keywords: Spatial misallocation; renewable energy policies; productivity; green preferences
    JEL: F37 O34
    Date: 2016–04
  4. By: Thilo Grau; Karsten Neuhoff
    Abstract: The increasing scale and dynamics of the global market for renewable energy technologies has often resulted in unexpected high deployment volumes in EU Member States. These deployment peaks were particularly strong for solar photovoltaic (PV) technologies in countries using feed-in tariff remuneration mechanisms. In this paper, we develop an analytic model to capture the interactions of national remuneration schemes with the global market. The model covers two countries and one global technology market. We calibrate the model for the impact of coordinated tariff adjustments based on the experience with PV in Germany and the UK. We then use the model to measure the impact of different global module supply functions, national installation price reductions, and specific shocks on deployment effectiveness in terms of reaching national or aggregated target corridors for separate and coordinated feed-in tariff adjustment mechanisms. The relevance of the insights for wind energy technologies is evaluated. Based on the results, we discuss the implications for the coordination of remuneration schemes.
    Keywords: Renewable energy, feed-in tariff, coordinated remuneration schemes
    JEL: D78 L94 O3
    Date: 2016
  5. By: Charlita de Freitas, Luciano; Fagundes Ferreira, Flávio; Bernardes da Silva Júnior, Osmar; Azevedo Marques Mello da Silva, João Marcelo; Vilas Boas de Freitas, Igor
    Abstract: In 2012, the Brazilian Telecommunications Regulatory Agency (Anatel) ruled the Conduct Adjustment Commitment (TAC). It refers to an alternative dispute resolution mechanism that allows shifting pecuniary penalties into infrastructure investments. This case study approaches the setting up of strategic investment projects and the definition of a methodology framework set to maximize the benefits of resource allocation. To reach its objective 5,565 municipalities were divided in clusters and ranked according to priority destination for investments. Results include a short list of preferential projects focused on enhancing broadband infrastructure, encouraging the competition and to enhance quality of services performance. Outputs of the methodology suggest that municipalities located at the outskirt of metropolitan regions, evenly distributed throughout the country, with relative lower HDI and higher demographic density are the top ranked destination for investment.
    Keywords: Alternative dispute resolution settlement; enforcement proceedings; cluster analysis; broadband infrastructure investment; TAC; Telecomnuicações; Brazil.
    JEL: K23 L5 L96 O2
    Date: 2016–02–01
  6. By: Richard Meade
    Abstract: We extend the theory of monopoly regulation under imperfect information to the case of customer, rather than investor, ownership. The firm's manager can exert two types of effort - a contractible effort to reduce costs, and a non-contractible effort to increase quality. The former decreases expected costs and increases expected profits, while the latter increases expected demand, costs and consumer surplus. We show that the manager faces a conflict between pursuing cost reductions and quality when his or her net marginal disutility of cost-reducing effort is sufficiently increased by quality-enhancing effort. We further show that this conflict can arise even without an effort substitution effect. Thus stronger incentives (i.e. a higher managerial profit share) induce greater cost-reducing effort, but lower quality-enhancing effort. Since customer owners value consumer surplus as well as profits, they optimally provide the manager with weaker incentives than investor owners - who only value profits - for a given regulated price. This implies higher quality but lower efficiency under customer ownership, given price. A customer-owned firm is optimally set a tighter price cap than an investor-owned firm if its profits are less price-sensitive than is relative consumer surplus. This can result in quality differences being reduced between ownership types, but with ambiguous impacts on efficiency differences. Failure to account for ownership-related differences in objective functions gives rise to regulatory distortions.
    Keywords: Regulation, Moral Hazard, Cooperatives, Electric Utilities, Gas, Water Utilities, Profit Sharing
    JEL: D82 J33 L51 L94 L95 P13
    Date: 2015–05
  7. By: Seung-Gyu Sim (University of Tokyo); Hsuan-Chih Lin (Institute of Economics, Academia Sinica, Taipei, Taiwan)
    Abstract: It is generally accepted that the Pigouvian taxation scheme and emission trading scheme (delegating the emission pricing authority to the market mechanism) offer equivalent incentives to reduce emissions. In contrast, we demonstrate that in a globalized economy with international trade and cross border pollution, (i) the latter outperforms the former in terms of domestic welfare, and (ii) global welfare improves as more countries switch to the latter. We find that adopting the emission trading scheme incentivizes a foreign country to raise emission taxes without concern for excessive shrink of domestic production and/or aggravation of cross border pollution from the home country. JEL Classification: H23, L51, Q56, Q58
    Keywords: Emission Trading Scheme, Pigouvian Taxation, International Trade, Cross Border Pollution
    Date: 2016–04
  8. By: Zaifu Yang; Rong Zhang; Zongyi Zhang
    Abstract: Following Jansen et al. (2012), we examine an unconventional Cournot model of the European Union natural gas market with three major suppliers Russian Gazprom, Norwegian Statoil, and Algerian Sonatrach. To re ect Russia's other strategic consideration besides profit, we incorporate a relative market share into Gazprom's objective function. We prove that when Gazprom pursues the control of market share along with profit, it will be good news for consumers but bad news for its pure profit maximising rivals. We further show that by seeking a proper market share, Gazprom can achieve the same profit of a Stackelberg leader in a simultaneous move model as in the standard sequential move leader-follower model. Compared with Jansen et al.'s, our approach makes the analysis considerably simpler and more transparent.
    Keywords: Natural gas market, Cournot model, Stackelberg leader's advantage, Non-profit incentive, Relative market share, European Union
    JEL: C62 C72 L13 L95 Q41
    Date: 2016–05
  9. By: Curtis, John; Devitt, Niamh; Whelan, Adele
    Date: 2015–07
  10. By: Michal Litwinski (Poznan University of Economics)
    Abstract: The aim of the article is to verify a hypothesis about positive influence of instrument of energy poverty alleviation policy on quality of life in Poland. In the article literature review is presented. There is also conducted quantitative analysis of data for 2004-2014. Variables regarding energy policy were obtained from OECD database, variables regarding quality of life – from Eurostat. The analysis confirmed that shaping one of the instruments of energy poverty alleviation policy – energy prices can positively affect access to electricity, thereby reducing scope and depth of energy poverty. Limitation of this phenomena could be a reason of quality of life increase.
    Keywords: energy policy; quality of life; energy prices
    JEL: I31 C32 Q48
    Date: 2016–05
  11. By: Loan T. Le (Faculty of Economics, Nong Lam University)
    Keywords: Biofuels, Transport, Vietnam
    Date: 2016–04

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