nep-reg New Economics Papers
on Regulation
Issue of 2016‒07‒30
ten papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Cost-effectiveness and Incidence of Renewable Energy Promotion in Germany By Christoph Böhringer; Florian Landis; Miguel Angel Tovar Reaños
  2. Competition in Retail Electricity Markets : An Assessment of Ten Years Dutch Experience By Willems, Bert; Mulder, M.
  3. Pricing electricity and supporting renewables in Heavily Energy Subsidized Economies By David Newbery
  4. The Effect of Energy Efficiency Labeling: Bunching and Prices in the Irish Residential Property Market By Marie Hyland; Anna Alberini; Seán Lyons
  5. Complexity and the Economics of Climate Change: a Survey and a Look Forward By Tomas Balint; Francesco Lamperti; Antoine Mandel; Mauro Napoletano; Andrea Roventini; Alessandro Sapio
  6. Climate Change and Firm Valuation: Evidence from a Quasi-Natural Experiment By Philipp KRÜGER
  7. Automated variable selection and shrinkage for day-ahead electricity price forecasting By Bartosz Uniejewski; Jakub Nowotarski; Rafal Weron
  8. Hospital competition with heterogeneous patient groups: Incentives and regulation By Vomhof, Markus
  9. Innovation, competition and public procurement in the pre-commercial phase By Valeria De Bonis
  10. Priorities for completing the European Union's Single Market By Jan Stráský

  1. By: Christoph Böhringer (University of Oldenburg, Department of Economics, Germany); Florian Landis (ETH Zürich, Switzerland); Miguel Angel Tovar Reaños (Center for European Research (ZEW), Mannheim, Germany)
    Abstract: Over the last decade Germany has boosted renewable energy in power production by means of massive subsidies. The flip side are very high electricity prices which raises concerns that the transition cost towards a renewable energy system will be mainly borne by poor households. In this paper, we combine computable general equilibrium and microsimulation analysis to investigate the cost-effectiveness and incidence of Germany's renewable energy promotion. We find that the regressive effects of renewable energy promotion could be attenuated by alternative subsidy financing mechanisms which achieve the same level of electricity generation from renewable energy sources.
    Keywords: Renewable energy policy, feed-in tariffs, CGE, microsimulation
    JEL: Q42 H23 C63
    Date: 2016–07
  2. By: Willems, Bert (Tilburg University, Center For Economic Research); Mulder, M.
    Abstract: This paper examines a decade of retail competition in the Dutch electricity market and discusses market structure, regulation, and market performance. We find a proliferation of product variety, in particular by the introduction of quality-differentiated green-energy products. Product innovation could be a sign of a well-functioning market that caters to customer’s preferences, but it can also indicate a strategic product differentiation to soften price competition. Although slightly downward trending, gross retail margins remain relatively high, especially for green products. Price dispersion across retailers for identical products remains high, as also across products for a single retailer. We do not find evidence of asymmetric pass-through of wholesale costs. Overall, the retail market matured as evidenced by fewer consumer complaints and higher switching rates. A fairly intensive regulation of mature energy retail markets appears to be needed to create benefits for consumers.
    Keywords: retail electricity market; competition; regulation; ex-post assessment
    JEL: L94 L43 L11
    Date: 2016
  3. By: David Newbery
    Abstract: Heavily Energy Subsidized Economies, defined as having budgetary subsidies above 1.5% of GDP, on average in 2014 spent 4% of GDP on subsidizing energy. Resource rents permit administratively undemanding transfers to citizens to maintain political support. Once in place, benefitting groups will resist their removal, despite the resulting inefficient consumption and the lock-in risk caused by sustained low energy prices. Collapsing energy prices that deliver severe fiscal shocks combined with growing concerns over climate change damage make carefully designed reforms both urgent and politically more acceptable. Understanding their political logic suggests designing reforms that compensate the most vocal interest groups and there is evidence that this is increasingly recognized. The paper presents evidence on the magnitude and impacts of oil gas and electricity subsidies, and discusses how the electricity sector can be weaned of subsidies while reducing its carbon emissions.
    Keywords: Energy subsidies, interest group politics, reforming electricity tariffs, PV
    JEL: H23 H53 Q41 Q48 Q54
    Date: 2016–07–06
  4. By: Marie Hyland (Department of Economics, Trinity College Dublin and Economic and Social Research Institute (ESRI)); Anna Alberini (Department of Agricultural and Resource Economics, University of Maryland); Seán Lyons (Economic and Social Research Institute (ESRI) and Trinity College Dublin)
    Abstract: This paper analyses the system of energy performance certificates in place in Ireland. We find that having a system with discrete energy-efficiency thresholds causes “bunching” among properties just on the more favorable side of the label cut-off points. This indicates that, in the region around the label thresholds, assessors tend to be extra lenient when evaluating the energy performance of dwellings. We examine possible reasons for this finding, including the market returns to energy efficiency using home sales data from the Irish property price register, and conclude that most likely assessors are trying to ingratiate homeowners to get repeat business. We find evidence of a partial “disconnect” between sellers' expectations and buyers' valuation of properties labeled as more efficient.
    Keywords: Residential energy efficiency; Energy Performance Certificates; Bunching
    JEL: Q40 Q48 R21
    Date: 2016–03
  5. By: Tomas Balint; Francesco Lamperti; Antoine Mandel; Mauro Napoletano; Andrea Roventini; Alessandro Sapio
    Abstract: We provide a survey of the micro and macro economics of climate change from a complexity science perspective and we discuss the challenges ahead for this line of research. We identify four areas of the literature where complex system models have already produced valuable insights: (i) coalition formation and climate negotiations, (ii) macroeconomic impacts of climate-related events, (iii) energy markets and (iv) diffusion of climate-friendly technologies. On each of these issues, accounting for heterogeneity, interactions and disequilibrium dynamics provides a complementary and novel perspective to the one of standard equilibrium models. Furthermore, it highlights the potential economic benefits of mitigation and adaptation policies and the risk of under-estimating systemic climate change-related risks.
    Keywords: climate change, climate policy, climate economics, complex systems, agent-based models, socio-economic networks
    Date: 2016–10–07
  6. By: Philipp KRÜGER (University of Geneva and Swiss Finance Institute)
    Abstract: In this paper, I estimate the effect of mandatory greenhouse gas (GHG) emissions disclosure on corporate value. Using the introduction of mandatory GHG emissions reporting for firms listed on the Main Market of the London Stock Exchange as a source of exogenous variation, I find that firms most heavily affected by the regulation experience significantly positive valuation effects. Increases in value are strongest for large firms and for firms from carbon intensive industries (e.g., oil and gas). Valuation increases are driven by capital market effects such as higher liquidity and lower bid -- ask spreads for the most affected firms.
    Keywords: Mandatory disclosure regulation, greenhouse gas emissions, climate change, valuation, difference-in-differences, value
    JEL: D22 G18 G28 G38 K22 K32 L51 M48 Q52 Q54
  7. By: Bartosz Uniejewski; Jakub Nowotarski; Rafal Weron
    Abstract: In day-ahead electricity price forecasting (EPF) variable selection is a crucial issue. Conducting an extensive empirical study involving state-of-the-art parsimonious expert models as benchmarks, datasets from three major power markets and five classes of automated selection and shrinkage procedures (single-step elimination, stepwise regression, ridge regression, lasso and elastic nets) we show that using the latter two classes can bring significant accuracy gains compared to commonly used EPF models. In particular, one of the elastic nets - a class that has not been considered in EPF before - stands out as the best performing model overall.
    Keywords: Electricity price forecasting; Day-ahead market; Autoregression; Variable selection; Stepwise regression; Ridge regression; Lasso; Elastic net
    JEL: C14 C22 C51 C53 Q47
    Date: 2016–07–05
  8. By: Vomhof, Markus
    Abstract: Competing hospitals may not only use quality of service to attract patients but also their specialization profile. Applying a Hotelling-duopoly and interpreting respectively quality and specialization as vertical and horizontal differentiation, we analyze the optimal allocation in both dimensions for hospitals. To account for heterogeneity in preferences as well as in the health status, two patient groups are introduced. These groups differ in two parameters, (i) treatment costs and (ii) preference for a good match between patients' needs and hospitals' specialization profile. Moreover, we derive the optimal reimbursement scheme a regulator is able to achieve. The results show that the hospitals' specialization decision is determined mainly by two relations: which group is more profitable for hospitals and which group is endowed with the higher preference for a good match. The reimbursement scheme a regulator implements deviates from a pure cost partitioning scheme. In particular, the regulator aims at inducing higher quality by exploiting the heterogeneity in preferences.
    Abstract: Im Wettbewerb stehende Krankenhäuser könnten nicht nur Qualität, sondern auch ihr Spezialisierungsprofil nutzen, um attraktiver für Patienten zu werden. Wir wenden ein Hotelling Duopol mit vertikaler und horizontaler Differenzierung an, wobei erstere als Qualität und letztere als Spezialisierung interpretiert wird, um die optimale Allokation für Krankenhäuser in beiden Dimensionen zu untersuchen. Um Heterogenität in Präferenzen und im Gesundheitsstatus zu beachten, werden zwei Patientengruppen eingeführt. Diese Gruppen unterscheiden sich in zwei Parametern, (i) den Behandlungskosten und (ii) der Präferenz für eine gute Übereinstimmung zwischen den Bedürfnissen der Patienten und der Spezialisierung der Krankenhäuser. Zudem bestimmen wir das optimale Vergütungssystem, das mit Hilfe eines Regulators erreicht werden kann. Die Ergebnisse zeigen, dass die Spezialisierungsentscheidung von Krankenhäusern durch zwei Relationen bestimmt wird: Welche Gruppe ist für Krankenhäuser profitabler und welche Gruppe ist mit der stärkeren Präferenz für eine gute Übereinstimmung ausgestattet. Das Vergütungssystem des Regulators weicht von einer reinen Kostenaufteilung ab. Der Regulator möchte eine höhere Qualität erreichen, indem er die Heterogenität in den Präferenzen ausnutzt.
    Keywords: hospital competition,heterogeneity,hotelling-duopoly,regulation
    JEL: I11 I18 L13
    Date: 2016
  9. By: Valeria De Bonis (Università Sapienza di Roma - Dipartimento di Studi Giuridici, Filosofici ed Economici)
    Abstract: Should the supply or the demand side bear the risk connected to innovation? The two polar cases identified in the literature are the supply push and the demand pull. The former is the typical one, with the supplier bearing the costs and obtaining the benefits from innovating. The latter is technology procurement, where the buyer takes the risk, by procuring the innovative good or service. With respect to this, pre-commercial procurement is a peculiar solution that can explain the debate found in the literature relative to its configuration either as a supply-side or a demand-side instrument. The separation from the commercial phase allows the procurer to take only (part of) the risks connected to R&D services. Also, competition among suppliers gives the opportunity of evaluating different solutions and to obtain, in the commercial phase, a lower price for the innovative good. The counterpart of all this is a large portion of risk being left to the supplier. As a consequence, suppliers need to obtain a larger share of the benefits of the innovation process. This economic reason, besides the legal restrictions on State aid, explains the need for a shared risks-shared benefits approach, centred on the agreements on the assignment of IPRs.
    Keywords: innovation; competition; public procurement for innovation; pre-commercial procurement.
    JEL: H57 K21 L16 M38 O34 O38
    Date: 2016–07
  10. By: Jan Stráský
    Abstract: The EU Single Market remains far from completed: progress in goods and services market integration has stalled, financial markets are still fragmented along national lines and the barriers to labour mobility remain high. Restrictive regulation within countries and regulatory heterogeneity across them hamper the internal market, reducing trade and investment flows. Network sectors, such as energy and transportation, are insufficiently interconnected and open to competition, and inefficient as a result. Reinvigorating the single market is one of the key tools to strengthen the recovery of the European Union and restore faster growth of income per capita. To support the recovery, structural reforms that yield short-run as well as long-run gains should be prioritised. Policies enhancing labour and capital mobility are especially relevant, as they provide channels of adjustment to country-specific shocks and reinforce the effectiveness of stabilisation policies. Policies enhancing capital mobility include improved securitisation, better collection and sharing of credit information regarding smaller firms and the convergence of insolvency regimes. Labour mobility within the European Union would profit from reduced administrative and regulatory burden, such as faster recognition of professional qualifications and better portability of social and pension rights. Product markets reforms also have the potential to deliver benefits swiftly, not least by unlocking investment. Regulatory burdens could be alleviated by better impact assessment for legislative proposals and ex post evaluation of policies. Product market reforms in network sectors should include harmonisation of regulations and technical specifications, with the target of establishing single EU regulators. This Working Paper relates to the 2016 OECD Economic Survey of the European Union ( Priorités pour l'achèvement du marché unique dans l'Union Européenne Le marché unique de l’UE est encore loin d’être achevé : les progrès en matière d’intégration des marchés de produits et services marquent le pas, les marchés financiers demeurent fragmentés par pays et les obstacles à la mobilité de la main-d’oeuvre restent nombreux. La réglementation restrictive dans les pays et l’hétérogénéité des réglementations entre eux entravent le marché intérieur, ce qui provoque une réduction des courants d’échanges et des flux d’investissement. Les industries de réseau, comme l’énergie et les transports par exemple, ne sont pas suffisamment interdépendantes et ouvertes à la concurrence, d’où leur inefficience. La redynamisation du marché unique est l’un des principaux outils pour consolider la reprise dans l'Union européenne et renouer avec une croissance plus rapide du revenu par habitant. Pour stimuler la reprise, les réformes structurelles qui sont à l’origine de progrès à court et long terme devraient avoir la priorité. Les mesures qui renforcent la mobilité de la main-d’oeuvre et des capitaux sont particulièrement importantes puisqu’elles offrent des solutions d’ajustement aux chocs propres à certains pays et améliorent l’efficacité des mesures de stabilisation. Les mesures qui renforcent la mobilité des capitaux englobent une titrisation réactivée, un recueil et un partage améliorés des données sur le crédit concernant les petites entreprises et la convergence des régimes de faillite. La mobilité de la main-d’oeuvre au sein de l’Union européenne aurait tout à gagner d’une réduction de la charge administrative et du poids de la réglementation, par exemple via une reconnaissance plus rapide des qualifications professionnelles et une meilleure transférabilité des prestations sociales et droits à pension. Les réformes des marchés de produits sont aussi susceptibles d’avoir des effets positifs rapides, notamment en facilitant l’investissement. Le poids de la réglementation pourrait être allégé grâce à une analyse d’impact de meilleure qualité pour les propositions législatives et à une évaluation ex post des mesures. Les réformes des marchés de produits dans les industries de réseau devraient inclure une harmonisation des réglementations et spécifications techniques dans le but de créer une autorité de régulation unique à l'échelle de l'UE. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de l'Union Européenne ( ique-union-europeenne-et-zone-euro.htm)
    Keywords: economic integration, labour migration, EU single market, non-bank financial institutions, Capital Markets Union, intégration économique, institutions financières non bancaires, migration de la main-d'oeuvre, Marché unique européen
    JEL: F15 F22 F36 G23 L51 L88 L98
    Date: 2016–07–26

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