|
on Regulation |
| By: | Johannes Herrmann; Ivan Savin |
| Abstract: | The diffusion of renewable electricity generating technologies is widely considered as crucial for establishing a sustainable energy system in the future. However, the required transition is unlikely to be achieved by market forces alone. For this reason, many countries implement various policy instruments to support this pro- cess, also by re-distributing related costs among all electricity consumers. This paper presents a novel history-friendly agent-based study aiming to explore the efficiency of different mixes of policy instruments by means of a Differential Evolution algorithm. Special emphasis of the model is devoted to the possibility of small scale renewable electricity generation, but also to the storage of this electricity using small scale facilities being actively developed over the last decade. Both combined pose an important instrument for electricity consumers to achieve partial or full autarky from the electricity grid, particularly after accounting for decreasing costs and increasing efficiency of both due to continuous innovation. Among other things, we find that the historical policy mix of Germany introduced too strong and inflexible demand-side instruments (like feed-in tariff ) too early, thereby creating strong path-dependency for future policy makers and reducing their ability to react to technological but also economic shocks without further increases of the budget. |
| Keywords: | differential evolution; electricity storage; energy grid; feed-in tariff; renewable energy. |
| JEL: | C63 Q41 Q42 Q48 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2016-16&r=reg |
| By: | Stefan P. Schleicher (Wegener Center for Climate and Global Change at the University of Graz); Angela Köppl (Austrian Institute of Economic Research); Alexander Zeitlberger (Wegener Center for Climate and Global Change at the University of Graz) |
| Abstract: | Pursuing an evidence based approach we summarize the key elements of the European Commission’s proposal of July 2015 for a reform of the EU Emissions Trading System and offer facts about the current state of EU ETS that underline the needs for such a reform. We supply key data for understanding the current state of EU ETS and report in particular the share of freely allocated allowances in emissions for the various sectors since the start of EU ETS in 2005. This is the most relevant parameter for evaluating the stringency and cost impacts of the EU ETS on sectors and installations. We provide propositions for enhancing the allocation procedure of both free and auctioned allowances, the fundamental element in the cap and trade design of this system. We link this procedure closely to the relevant suggestions of the Commission proposal and offer extensions that can make in particular the allocation of free allowances more targeted and effective. We indicate how the impacts of free allowances can be calculated both for sectors and installations and conclude that these reform steps could reduce the administrative burden of the system. |
| Keywords: | EU Emissions Trading System, Reform Options, EU Commission’s Proposal |
| JEL: | Q53 Q54 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2016.27&r=reg |
| By: | Angelo Castaldo ("Sapienza" University of Rome); Alessandro Fiorini ("Sapienza" University of Rome); Bernardo Maggi ("Sapienza" University of Rome) |
| Abstract: | Technological innovation is viewed as a major stimulus for economic growth. High-speed internet access via broadband infrastructure has been experiencing a prompt development since the end of 90s, thanks to the deployment of both fix and mobile technologies. The present study investigates on the behavior of broadband diffusion as a technological determinant of economic growth in the main OECD countries. The estimations performed allowed to control and interpret the time evolution of the phenomenon according to the achievable target of growth, as resulting from the promotion of broadband internet connections. Our main goal is to provide evidence of a relevant - in quantitative term - relation between broadband diffusion and economic dynamics in the short, medium and long run. |
| Keywords: | Broadband access, economic growth, technology diffusion, logistic curve, dynamic panel. |
| JEL: | L96 O47 O33 H54 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:sas:wpaper:20161&r=reg |
| By: | Gabriel Di Bella; Francesco Grigoli |
| Abstract: | Poor performance of the electricity sector remains a drag to economic efficiency and a bottleneck to economic activity in many low-income countries. This paper proposes a number of models that account for different equilibria (some better, some worse) of the electricity sector. They show how policy choices (affecting insolvency prospects or related to rules for electricity dispatching or tariff setting), stochastic generation costs, and initial conditions, affect investment in generation and electricity supply. They also show how credible (non-credible) promises of stronger enforcement to reduce theft result in larger (smaller) electricity supply, lower (higher) government subsidies, and lower (higher) tariffs and distribution losses, which in turn affect economic activity. To illustrate these findings, the paper reviews the experience of Haiti, a country stuck in a bad equilibrium of insufficient supply, high prices, and electricity theft; and that of Nicaragua, which is gradually transitioning to a better equilibrium of the electricity sector. |
| Keywords: | Electricity;Low-income developing countries;Subsidies;Tariffs;Supply and demand;Haiti;Nicaragua;Cross country analysis;Econometric models;Credible and Non-Credible Promises, Economic efficiency, Economic infrastructure, Electricity Sector, Electricity Theft, Haiti, Nicaragua |
| Date: | 2016–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/85&r=reg |
| By: | Erdogdu, Erkan |
| Abstract: | This paper uses high frequency spot price data from fourteen wholesale electricity markets in Europe to analyze asymmetric volatility in European day-ahead power markets with Exponential GARCH (E-GARCH) and TARCH models. Our data set ranges from 1992 to 2015 and consists of approximately 926 thousand observations. As such, this paper constitutes the most extensive and comprehensive work conducted so far on European power markets, to the best of our knowledge. Unlike most of the literature that treats price as a continuous variable and attempts to model its trajectory, this paper adopts a unique approach and regards each hour in a day a separate market. The results show, in post-2008 period, the most expensive electricity is consumed in Turkey, Ireland and UK while the cheapest power is in Russia, Nordic countries and Czech Republic. Russia, Poland and Czech Republic have the least volatile markets while France, Ireland and Portugal have the most volatile ones. Volatility has decreased in many European countries in post-2008 period. Besides, we find magnitude effect is usually larger than the leverage effect, meaning that the absolute value of price change is relatively more important than the sign of the change (whether it is an increase or a decrease) to explain volatility in European day-ahead power markets. Moreover, the results imply there isn’t a uniform inverse leverage effect in electricity prices; that is, price increases are more destabilizing in some European markets (e.g. Poland, Slovenia, Ireland, Netherlands) than comparable price decreases but vice versa also holds true in some other countries (e.g. Portugal and France). Leverage (or inverse leverage) effect in post-2008 period is relatively stronger in Portugal, France and Ireland; but its impact is quite limited in Turkey and Germany. Furthermore, although the impact of seasonality on prices is obvious, a specific pattern cannot be identified. Finally, large changes in the volatility will affect future volatilities for a relatively longer period of time in Nordic countries, Ireland and the UK while changes in current volatility will have less effect on future volatilities in Czech Republic, Russia and Turkey. |
| Keywords: | asymmetric volatility; price modeling; European power markets; E-GARCH, TARCH |
| JEL: | D44 D47 L94 Q41 |
| Date: | 2015–08–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70986&r=reg |
| By: | Peyman Khezr (School of Economics, The University of Queensland); Ian A. MacKenzie (School of Economics, The University of Queensland) |
| Abstract: | This article investigates pollution permit consignment auctions. In this process firms obtain an initial endowment of permits that must be consigned to the auctioneer for sale. In the auction, firms bid for permits, obtain their equilibrium permit allocations, and receive revenue from their consigned permits. The main justifications for this auction are that it is politically attractive and generates clear price discovery. Yet we show this auction provides no clear price signal: in equilibrium, firms demand their own initial endowments and their payoffs are independent of the clearing price. Our results have policy implications for the California Cap-and-Trade Program. |
| Keywords: | permit auction; consignment |
| JEL: | D44 Q52 |
| Date: | 2016–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:558&r=reg |
| By: | Jin Fan (School of Management, University of Science and Technology of China); Jun Li (School of Management, University of Science and Technology of China); Yanrui Wu (Business School, University of Western Australia); Shanyong Wang (School of Management, University of Science and Technology of China); Dingtao Zhao (School of Management, University of Science and Technology of China) |
| Abstract: | Personal carbon trading (PCT) is a downstream cap-and-trade scheme which could be used to reduce carbon emissions from the household sector. To explore the effectiveness of this scheme, it is necessary to investigate how consumers respond to allowance price change.. In this paper, a general utility optimization (GUO) model and a constant elasticity of substitution (CES) utility function are proposed to examine the price, substitution and income effects of carbon allowance price changes. It is shown that higher income consumers are more sensitive to the allowance price changes than lower income consumers. Moreover, the short-run adjustment in consumers’ consumption of electricity in response to a change in allowance price would be lower than the long-run value. According to the sensitivity analysis, downward (upward) adjustments in the elasticity of substitution result in a positive (negative) effect on price effect. The findings in this study are used to draw policy implications. Suggestions for future research are also provided. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:uwa:wpaper:16-07&r=reg |
| By: | Daniel Rais |
| Abstract: | The shift to renewable energy is of key importance to decarbonisation of economies and to achieving effective results addressing global warming and rapid climate change. Enhanced recourse in the production of electricity – the main driver and engine of modern life – to solar, wind and tidal energy, complementing hydropower, is essential if informally defined goals to keep the increase of average global temperatures below 2 degrees Celsius in this century are to be realised. |
| Date: | 2014–11–07 |
| URL: | http://d.repec.org/n?u=RePEc:wti:papers:766&r=reg |
| By: | Cary Deck (University of Arkansas); Erik O. Kimbrough (Simon Fraser University) |
| Abstract: | We report an experimental test of alternative rules in multi-stage innovation contests when success may not be feasible and contestants may learn from each other. Following Halac et al. (forthcoming), the planner can vary the prize allocation rule from Winner-Take-All in which the rst successful innovator receives the entire prize to Shared in which all successful innovators during the contest duration share in the prize. The planner can also vary the information disclosure policy from Public in which at each period, all information about contestants' past successes and failures is publicly available, to Private, in which contestants only know their own histories. In our setting, the theoretically optimal contest design depends on the probability of successful innovation, given that innovation is feasible. Under some parameters the designer will prefer a WTA-Public contest; while, under others he will prefer Shared-Private. Our experiments provide evidence that Private disclosure contests behaviorally dominate Public disclosure, regardless of the prize allocation rule, and moreover that Shared-Private contests dominate WTA-Private contests. |
| Keywords: | research and development, contests, experiments |
| JEL: | C7 C9 D4 D7 |
| Date: | 2016–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:sfu:sfudps:dp16-08&r=reg |
| By: | Gustafsson, Anders (The Ratio institute and Jönköping School of Economics); Stephan, Andreas (The Ratio institute and Jönköping School of Economics); karlson, Nils (The Ratio institute); Hallman, Alice (The Ratio institute) |
| Abstract: | The governments of most advanced countries offer some type of financial subsidy to encourage firm innovation and productivity. This paper analyzes the effects of innovation subsidies using a unique Swedish database that contains firm level data for the period 1997-2011, specifically information on firm subsidies over a broad range of programs. Applying causal treatment effect analysis based on matching and a diff-in-diff approach combined with a qualitative case study of Swedish innovation subsidy programs, we test whether such subsidies have positive effects on firm performance. Our results indicate a lack of positive performance effects in the long run for the majority of firms, albeit there are positive short-run effects on human capital investments and also positive short-term productivity effects for the smallest firms. These findings are interpreted from a robust political economy perspective that reveals that the problems of acquiring correct information and designing appropriate incentives are so complex that the absence of significant positive long-run effects on firm performance for the majority of firms is not surprising. |
| Keywords: | Innovation subsidies; market failures; causal treatment effect evaluation; firm performance; CEM; robust political economy |
| JEL: | H25 O38 P16 |
| Date: | 2016–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0270&r=reg |
| By: | Navarro, Adoracion M.; Detros, Keith C.; dela Cruz, Kirsten J. |
| Abstract: | This study evaluates the achievement of the desired outcomes of the competition policies contained in the Electric Power Industry Restructuring Act of 2001 (EPIRA). It traces the evolution of the electric power industry before EPIRA and post-EPIRA. It looks at impacts on the consumers in terms of price affordability and supply reliability, and impact on production efficiency in terms of system loss reduction. In pre-EPIRA, electricity price in the Philippines was already high relative to other countries. Trends show that, in real terms, there was a price uptrend during the transition (2001-2005) toward the start of competition in the generation sector. There was a slight downtrend in the real price of electricity after the introduction of spot electricity trading, but the price of electricity remains high and it has not declined to pre-EPIRA levels. There is a danger that the findings on price trends could provide ammunition to those advocating the repeal of the EPIRA and renationalization of the industry. It must be emphasized, however, that the country has a long history of private sector-led electric power industry. Moreover, the nationalization years were marked by inefficiencies and fiscal problems that were not borne by electricity consumers alone but by the whole country. Thus, calls to repeal EPIRA are ill-advised. What needs to be done is to find ways of improving its implementation. The electricity spot market has to be governed by an independent market operator, regulatory capacity has to be strengthened, and the energy department needs to beef up its planning function. |
| Keywords: | Philippines, competition, EPIRA, electric power industry, restructuring, electricity price |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:phd:rpseri:dp_2016-15&r=reg |
| By: | Peter Maniloff (Division of Economics and Business, Colorado School of Mines) |
| Abstract: | This paper proposes a Bayesian learning model of regulatory enforcement. Firms exert compliance effort based on their belief about a regulator's effort level. Firms use regulatory actions to learn about the regulator and update their own compliance efforts accordingly. This theoretical model suggests that deterrence will be most effective when regulators have discretion or when firms are inexperienced. Econometric analysis of inspections of Pennsylvania oil and gas wells supports these hypothesis. This work provides a causal mechanism for the commonly observed phenomenon of general deterrence in which regulatory actions towards one firm lead other fims to increase their own compliance. |
| Keywords: | enforcement, deterrence, reputation oil and gas, hydraulic fracturing |
| JEL: | D22 K32 L51 L71 Q58 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:mns:wpaper:wp201604&r=reg |
| By: | Olufolajimi Oke; Daniel Huppmann; Max Marshall; Ricky Poulton; Sauleh Siddiqui |
| Abstract: | We present a medium-term market equilibrium model of the North American crude oil sector via which we develop a scenario analysis to investigate strategies to mitigate the environmental and public-safety risks from crude-by-rail transportation across the United States. The model captures crude oil movements across rail- roads, pipelines and waterways, while distinguishing between light and heavy crude qualities. We find that restricting rail loads or increasing pipeline capacity from areas driving production will significantly reduce rail movements. However, lifting the United States crude oil export ban in isolation will only increase rail transportation volumes. We show that an integrated policy of targeted rail caps, pipeline investments and lifting the export ban sustainably addresses medium-term crude-by-rail risks in the United States. |
| Keywords: | Crude-by-rail, market equilibrium, mixed complementarity problem, transportation capacity, infrastructure investment |
| JEL: | Q31 Q38 L71 C61 C72 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1575&r=reg |
| By: | GILL Derek (New Zealand Institute of Economic Research and Victoria University of Wellington) |
| Abstract: | This technical paper explores what is meant by ‘a regulatory management system’ and what the ‘elements’ of an RMS are. We distinguish between the formal system (what is in place) from the requisite regulatory management system (what is required for an ideal or high-performing regulatory management system). By the formal regulatory management system we mean the set of special measures that apply to the development of new, or the review of existing, regulations but do not apply to other policy interventions. By the requisite regulatory management system we mean the full set of functionality that is needed in a high-performing or ideal system. This distinction was important in the development of the case studies used in the project that discuss both how the formal regulatory management system affected the outcomes of the case studies and how a requisite system might have changed those outcomes. |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2016-13&r=reg |
| By: | KIM Song June (Kyungpook National University (KNU)Author-Name: CHOI Dae Yong; KDI School of Public Policy and Management) |
| Abstract: | The Government of the Republic of Korea has made great efforts to improve its regulatory management system and to realise regulatory reform since the economic crisis of the late 1990s. Section 1 of this paper explores the evolution of regulatory reform and reviews the coherence of the regulatory management system in the Republic of Korea. Sections 2 and 3 explore how this system was applied in two case studies of regulatory change: Section 2 on golf course regulation and Section 3 on the restriction of opening hours of food services businesses. |
| JEL: | F15 F23 K20 I |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2016-15&r=reg |
| By: | Pablo Pintos (Universidad Pontificia Comillas and Economics for Energy); Pedro Linares (Instituto de Investigación Tecnológica, Universidad Pontificia Comillas,Harvard Kennedy School; and Economics for Energy.) |
| Abstract: | The European Emissions Trading System (EU ETS) is the main instrument of the European Union (EU) against climate change. This mechanism is considered, from the theoretical point of view, as the most cost-effective method to reduce greenhouse gases (GHG). However, previous studies show that the agents who participate in these markets can behave in a way which may lead to inefficient CO 2 prices, creating doubts about the effectiveness of the system. This paper analyzes these possible anomalies by modeling the EU ETS under a rational market hypothesis and comparing the results with real market transactions. For this, we have built a bottom-up model, which represents the EU ETS in an integrated way, paying particular attention to the interactions among the most emissions intensive industries. The results show the benefits of this integrated modeling approach and how it better reflects real market conditions. We also present some preliminary conclusions regarding the behavior of the agents in the ETS market. |
| Keywords: | Keywords: EU ETS; industry; GHG emissions; behavior modeling; costs |
| JEL: | Q31 Q37 Q48 Q56 Q58 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:efe:wpaper:01-2016&r=reg |
| By: | Daniel Rais |
| Abstract: | Constructing an original panel on Maximum Residue Levels (MRLs) in pesticides for 50 countries over 2006-2012, this paper studies the effect of heterogeneity in MRL regulation on bilateral trade. We find evidence of regulatory heterogeneity diminishing trade at the extensive margin when the exporter faces more stringent regulation abroad, suggesting compliance costs in entering the destination market. Significantly, however, we also find strong evidence of regulatory heterogeneity increasing trade at the intensive margin for exports coming from countries that set the strictest standards, alluding to the positive informative effect of such regulation. |
| Date: | 2014–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wti:papers:836&r=reg |