nep-reg New Economics Papers
on Regulation
Issue of 2016‒08‒07
five papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Emissions trading and abatement cost savings: An estimation of China's thermal power industry By Ke Wang; Xian Zhang; Xueying Yu; Yi-Ming Wei; Bin Wang
  2. Hourly Price Elasticity Pattern of Electricity Demand in the German Day-ahead Market By Knaut, Andreas; Paulus, Simon
  3. A comprehensive ex-post assessment of the Italian RES policy: deployment, jobs, value added and import leakages By Mattia Cai, Niccolò Cusumano, Arturo Lorenzoni, Federico Pontoni
  4. Strengthening competition in network sectors and the internal market in Canada By Corinne Luu
  5. Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry By Aghion, Philippe; Dechezleprêtre, Antoine; Hemous, David; Martin, Ralf; Van Reenen, John

  1. By: Ke Wang; Xian Zhang; Xueying Yu; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology); Bin Wang
    Abstract: This study evaluates the efficiency advantage of a market-based emission permit trading policy instrument over a command and control policy instrument in the case of China's thermal power industry. We estimate the unrealized gains achievable through emission permit trading with an optimization frontier analysis. These unrealized gains include potential recoveries of electricity generation through eliminating spatial and temporal regulatory rigidity on emission permit trading. The results of an ex post estimation during 2006 and 2010 indicate a potential gain of 8.48% increase in electricity generation if both the intra- and inter-period regulatory rigidities CO2 emission permits trading had been eliminated. In addition, if the permit trading systems for three air pollutions, CO2, SO2, and NOx, had been completely integrated, a positive net synergy effect of 1.43% increase in electricity generation could have been secured. The unrealized gains identified in this study provide supports for establishing a nationwide emission permit trading system in China.
    Keywords: Data envelopment analysis, CO2 emissions, Regulatory rigidity, Synergy effect, Tradable permits
    JEL: Q54 Q40
    Date: 2016–07–01
  2. By: Knaut, Andreas (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)); Paulus, Simon (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))
    Abstract: System security in electricity markets relies crucially on the interaction between demand and supply over time. However, research on electricity markets has been mainly focusing on the supply side arguing that demand is rather inelastic. Assuming perfectly inelastic demand might lead to delusive statements regarding the price formation in electricity markets. In this article we quantify the short-run price elasticity of electricity demand in the German day-ahead market and show that demand is adjusting to price movements in the short-run. We are able to solve the simultaneity problem of demand and supply for the German market by incorporating variable renewable electricity generation for the estimation of electricity prices in our econometric approach. We find a daily pattern for demand elasticity on the German day-ahead market where price-induced demand response occurs in early morning and late afternoon hours. Consequently, price elasticity is lowest at night times and during the day. Our measured price elasticity peaks at a value of approximately -0.006 implying that a one percent increase in price reduces demand by 0.006 percent
    Keywords: electricity markets; hourly price elasticity of demand; empirical demand analysis
    JEL: C26 L94 Q21 Q41
    Date: 2016–08–02
  3. By: Mattia Cai, Niccolò Cusumano, Arturo Lorenzoni, Federico Pontoni
    Abstract: A massive deployment of renewable electricity generation took place in Italy in less than eight years. A generous feed-in tariff, coupled with favourable institutional conditions, allowed the installation of more than 28 GW of PV, wind and other RES technologies. By 2014, Italy has already attained its 2020 goals on RES production. Besides, environmental objectives and compliance with EU targets, the policy was aimed at promoting green jobs and industrial production of RES technologies. Exante economic analyses advocated considerable economic and industrial spill-overs from the introduction of RES support policies. Despite official rhetoric and ex-ante studies about jobs and economic growth associated to RES adoption, at scholarly level there is no consensus on the actual effects and implications of these policies on National economies. This paper provides a first comprehensive ex-post analysis of the Italian case, filling an important gap. Our analysis is carried out with the development of a specific input-output model, with refined technological vectors and with the internalization of trade coefficients. We show that the effects have been unequivocally lower than expected; that most of the jobs created belonged to the service sector and not to the industrial sector and that the value added was much lower than expected due to significant export leakages.
    Keywords: Value added, job creation, import leakage, renewable energy, support schemes
    JEL: J08 O13 Q40 Q42 Q48
    Date: 2016
  4. By: Corinne Luu
    Abstract: Canada’s productivity performance has lagged that of many other OECD countries, despite some improvement in recent years. One measure to enhance overall efficiency would be to strengthen competition on the domestic market to drive future multi-factor productivity improvements. The potential gains are large: about a half a percent per year over a fairly long horizon. This paper focuses on increasing competition in network sectors, including energy, telecommunication services and broadcasting, and transportation, which are key inputs to production in the broader economy. Improving regulatory conditions, efficiency and/or cost competitiveness could yield more productive outcomes in these sectors, as well as in downstream industries. Competition could also be increased by lowering barriers to interprovincial trade and the movement of labour, which act to fragment Canada’s already small domestic market. To this end, reforms of the Agreement on Internal Trade and measures to reduce sectoral barriers to trade are also discussed. This Working Paper relates to the 2016 OECD Economic Survey of Canada ( Concurrence dans les industries de réseau et renforcement du marché intérieur au Canada La productivité canadienne est inférieure à celle de nombreux pays de l’OCDE malgré quelques progrès ces dernières années. Il serait possible d’accroître l’efficience globale en renforçant la concurrence sur le marché intérieur afin de favoriser les futurs gains de productivité globale. Ces gains sont importants, de l’ordre d’un demi pour cent par an sur une période plutôt longue. Ce document porte principalement sur l’intensification de la concurrence dans les industries de réseau, comme l’énergie, les télécommunications, la diffusion audiovisuelle et les transports, qui jouent un rôle essentiel dans le processus de production de l’ensemble de l’économie. L’amélioration de la réglementation, l’augmentation de l’efficience et/ou le renforcement de la compétitivité-coût pourraient accroître la productivité dans ces secteurs, ainsi que dans les secteurs d’aval. La concurrence pourrait également être intensifiée par la réduction des obstacles aux échanges entre provinces et à la mobilité de la main-d’oeuvre, qui fragmentent un marché intérieur déjà petit. Ce document examine donc également les réformes possibles de l’Accord sur le commerce intérieur et les mesures visant à réduire les obstacles sectoriels aux échanges. Ce Document de travail se rapporte à l’Étude économique de l’OCDE du Canada 2016 ( ique-canada.htm)
    Keywords: productivity, network industries, competition, regulation, integration, productivité, concurrence, intégration, industries de réseaux, réglementation
    JEL: J44 L1 L3 L5 L66 L9 O43 Q18
    Date: 2016–08–03
  5. By: Aghion, Philippe; Dechezleprêtre, Antoine; Hemous, David; Martin, Ralf; Van Reenen, John
    Abstract: Can directed technical change be used to combat climate change? We construct new firm-level panel data on auto industry innovation distinguishing between "dirty" (internal combustion engine) and "clean" (e.g. electric and hybrid) patents across 80 countries over several decades. We show that firms tend to innovate relatively more in clean technologies when they face higher tax-inclusive fuel prices. Furthermore, there is path dependence in the type of innovation both from aggregate spillovers and from the firm's own innovation history. Using our model we simulate the increases in carbon taxes needed to allow clean to overtake dirty technologies.
    Date: 2016

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