|
on Regulation |
| By: | Rabindra Nepal (CDU Business School, Charles Darwin University); Flavio Menezes (School of Economics, University of Queensland) |
| Abstract: | The global experience with regulatory reforms that promote competition in small electricity markets, especially characterized by scattered networks serving low-density load, is limited. We contribute to this knowledge and policy gap by analyzing the reform experience and policy options in Australia’s Northern Territory (NT) market. This market underwent vertical separation and it is now regulated under the national regulatory framework. A virtual wholesale market was created as a stepping stone towards a fuller wholesale market. We find that the new regulatory reforms have improved wholesale market transparency and accountability. However, the anticipated prospect of lower energy prices to consumers will not materialize in the absence of effective regulation and more ambitious changes in the sector. More private participation in electricity generation and retail in the short-term and intra-regional market integration in the medium term may be appropriate policy options as the demand for electricity grows. Market integration can facilitate and not hinder the development of renewable energy. However, we conclude that reforms in smaller electricity markets such a NT should be geared towards meeting the environmental and decarbonization objectives from the early stages given the potential for tropical leadership in off-grid supply of renewable energy. |
| Keywords: | International reforms, small markets, renewable energy |
| JEL: | L94 L51 Q40 |
| Date: | 2016–07–29 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:561&r=reg |
| By: | Flavio Menezes (School of Economics, University of Queensland); Xuemei Zhang (School of Economics, Southwestern University of Finance and Economics) |
| Abstract: | This paper reviews the incentives for pursuing a low-carbon electricity sector that are embedded in China’s regulatory and policy framework. To do so, we first describe the industry structure and the regulatory framework. Second, we explicitly review the policies that were developed to promote energy efficiency and renewable energy. These policies range from the introduction of legal requirements to undertake particular actions to pricing mechanism and financial incentives. The paper reviews evidence that the various programs designed to replace less efficient with more efficient power generation units have already produced impressive results. In addition, there has been steady progress in reducing line losses. Thus, supply-side energy efficient initiatives have been, at least, moderately successful. In contrast, we show that demand-side energy efficiency initiatives seem to have gone nowhere. Finally, we tease out the challenges faced by a sector governed by a myriad of complex arrangements, different institutions and agents who face different and often conflicting incentives for pursuing environmental and energy efficiency objectives. |
| Keywords: | Regulatory Incentives, Energy Efficiency, Renewable Energy, Electricity Sector |
| Date: | 2016–08–08 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:562&r=reg |
| By: | Frank A. Wolak |
| Abstract: | This paper formulates and estimates a household-level, billing-cycle water demand model under increasing block prices that accounts for the impact of monthly weather variation, the amount of vegetation on the household’s property, and customer-level heterogeneity in demand due to household demographics. The model utilizes US Census data on the distribution of household demographics in the utility’s service territory to recover the impact of these factors on water demand. An index of the amount of vegetation on the household’s property is obtained from NASA satellite data. The household-level demand models are used to compute the distribution of utility-level water demand and revenues for any possible price schedule. Knowledge of the structure of customer-level demand can be used by the utility to design nonlinear pricing plans that achieve competing revenue or water conservation goals, which is crucial for water utilities to manage increasingly uncertain water availability yet still remain financially viable. Knowledge of how these demands differ across customers based on observable household characteristics can allow the utility to reduce the utility-wide revenue or sales risk it faces for any pricing plan. Knowledge of how the structure of demand varies across customers can be used to design personalized (based on observable household demographic characteristics) increasing block price schedules to further reduce the risk the utility faces on a system-wide basis. For the utilities considered, knowledge of the customer-level demographics that predict demand differences across households reduces the uncertainty in the utility’s system-wide revenues from 70 to 96 percent. Further reductions in the uncertainty in the utility’s system-wide revenues in the, range of 5 to 15 percent, are possible by re-designing the utility’s nonlinear price schedules to minimize the revenue risk it faces given the distribution of household-level demand in its service territory. |
| JEL: | L38 L5 L51 L95 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22503&r=reg |
| By: | Sinha, Pankaj; Mathur, Kritika |
| Abstract: | Given the thrust on the deregulation of electricity markets in India since 2003, the short term electricity market with power exchanges in particular have evolved rapidly to support the growth of the power markets in an efficient manner. Since their year of inception 2008, power exchanges are now more efficient and are able to mitigate risks arising from price volatility for the participants to a large extent. This paper throws light on the trading of day ahead electricity contracts in India. We try to assess whether day ahead electricity returns and return volatility exhibit weekday effect. The study also looks at the effect of traded volume of electricity on electricity return volatility and the impact of introduction of the fifteen minute contracts in the day ahead electricity market in India on returns and return volatility. |
| Keywords: | Power trading, electricity futures, Power exchange |
| JEL: | D44 Q41 Q48 |
| Date: | 2016–08–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:72969&r=reg |
| By: | Alexandre Croutzet; Pierre Lasserre |
| Abstract: | There are many instances where property rights are imperfectly defined, incomplete, or imperfectly enforced. The purpose of this normative paper is to address the following question: are there conditions under which partial property rights are economically efficient in a renewable resource economy? To address this question, we treat the level of completeness of property rights as a continuous variable in a renewable resource economy. By design, property rights restrict access to the resource, so that they may allow a limited number of firms to exercise market power. We show that there exists a level of property rights completeness that leads to first-best resource exploitation; this level is different from either absent or complete property rights. Complete rights are neither necessary nor sufficient for efficiency in presence of market power. We derive an analytic expression for the optimal level of property rights completeness and discuss its policy relevance and information requirements. The optimal level depends on i) the number of firms; ii) the elasticity of input productivity and iii) the price elasticity of market demand. We also find that a greater difference between the respective values of input and output requires stronger property rights. In fact, high profits both imply a severe potential commons problem and may be the expression of market power; strong property rights limit the commons problem; their incompleteness offsets market power. Biology also impacts the optimal quality of property rights: when the stock of resource is more sensitive to harvesting efforts, optimal property rights need to be more complete. |
| Keywords: | Institutions; property rights; entry; market power oligopoly; common access, |
| JEL: | K L1 Q2 Q3 |
| Date: | 2016–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2016s-39&r=reg |
| By: | Ohls, Jana; Pramor, Marcus; Tonzer, Lena |
| Abstract: | We analyze the inward and outward transmission of regulatory changes through German banks' (international) loan portfolio. Overall, our results provide evidence for international spillovers of prudential instruments, these spillovers are however quite heterogeneous between types of banks and can only be observed for some instruments. For instance, foreign banks located in Germany reduce their loan growth to the German economy in response to a tightening of sector-specific capital buffers, local reserve requirements and loan to value ratios in their home country. Furthermore, from the point of view of foreign countries, tightening reserve requirements was effective in reducing lending inflows from German banks. Finally, we find that business and financial cycles matter for lending decisions. |
| Keywords: | cross-border spillovers,prudential regulation,loan supply,German banks |
| JEL: | F30 G01 G21 G28 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdps:272016&r=reg |
| By: | Christoph Böhringer (University of Oldenburg, Department of Economics); Xaquin Garcia-Muros (Basque Centre for Climate Change (BC3), Bilbao, Spain); Ignacio Cazcarro (Basque Centre for Climate Change (BC3), Bilbao, Spain); Iñaki Arto (Basque Centre for Climate Change (BC3), Bilbao, Spain) |
| Abstract: | Despite recent achievements towards a global climate agreement, climate action to reduce greenhouse gas emissions remains quite heterogeneous across countries. Energy-intensive and trade-exposed (EITE) industries in industrialized countries are particularly concerned on stringent domestic emission pricing that may put them at a competitive disadvantage with respect to producers of similar goods in other countries without or only quite lenient emission regulation. This paper focuses on climate policy analysis for the United States of America (US) and compares the economic implications of four alternative protective measures for US EITE industries: (i) output-based rebates, (ii) exemptions from emission pricing, (iii) energy intensity standards, and (iv) carbon intensity standards. Based on simulations with a large-scale computable general equilibrium model for the global economy we quantify how these protective measures affect competitiveness of US EITE industries. We find that while protective measures can attenuate adverse competitiveness impacts measured in terms of common sector-specific competitiveness indicators, they run the risk of making US emission reduction much more costly than uniform emission pricing stand-alone. In fact, the cost increase is associated with negative income effects such that the gains of protective measures for EITE exports may be more than compensated through losses in domestic EITE demand. |
| Keywords: | Unilateral climate policy; competitiveness; computable general equilibrium |
| JEL: | D21 H23 D58 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:old:dpaper:392&r=reg |
| By: | Suzi Kerr (Motu Economic and Public Policy Research); Judd Ormsby (Motu Economic and Public Policy Research) |
| Abstract: | The New Zealand Emissions Trading Scheme (NZ ETS) presents an opportunity to compare the theory of linked emissions trading with practice. From 2009 until late 2012 New Zealand was linked to the Kyoto market and there was no indication that this link would be broken. In November 2012 the New Zealand government announced that it would not proceed with the second commitment period of the Kyoto Protocol and future linking became uncertain. This de-link was confirmed by the government in December 2013 and it was announced that it would take effect from 31 May 2015. After this date overseas Kyoto units were no longer acceptable for surrender within the NZ ETS. We find that prices within the NZ ETS behaved as theory would predict. In a climate of certain linking, from 2011 when New Zealand began buying overseas units to surrender, New Zealand Unit (NZU) prices were roughly equal to Kyoto prices. Once the possibility of a future de-link emerged, NZU and Kyoto prices decoupled. NZU prices traded at a price reflecting their anticipated future scarcity – for New Zealand as a buyer of units this implies that NZUs traded at a higher price. In anticipation of the coming de-link NZ ETS participants banked (almost) all of their NZUs for future use and used cheap Kyoto units to meet (almost) all of their current obligations. The long delay between the announcement and implementation of de-linking led to a large bank of NZUs. |
| Keywords: | New Zealand Emissions Trading Scheme (NZ ETS), climate change, mitigation, emissions trading, linked tradable permit market, Kyoto units, Certified Emission Reductions (CERs), Emission Reduction Units (ERUs), greenhouse gas, carbon markets |
| JEL: | Q54 Q58 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:mtu:wpaper:16_13&r=reg |
| By: | Ben Dkhil, Inès |
| Abstract: | The persistence of the market power in the fixed telecommunication markets in both developed and developing economies is due to the technical and economic features of this industry. This paper provides an overview of these characteristics and changes. It also suggests a comparative critical survey of the access pricing theories that are “the key” to the transition to the competition in the fixed telecommunication segment. Through this overview, we aim to underline among that the central role that the regulation should play to ensure the establishment of sustainable competition in the fixed telecommunication markets. |
| Keywords: | Essential facilities, bottleneck, local loop, network externalities, economies of scale and scope, sunk costs, the marginal rule, the margin rule, the Ramsey pricing, the Price Caps policy. |
| JEL: | L43 L51 |
| Date: | 2014–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:72909&r=reg |
| By: | Raul V. Fabella (School of Economics, University of the Philippines Diliman; National Academy of Science and Technology) |
| Abstract: | We revisit the question of why fixed rent contracts are less prevalent than crop share contracts despite Marshallian inefficiency. We consider the case where the type of the principal is endogenous to contract provisions and reneging by the principal may pay due to weak third party enforcement (TPE). We imbed the quality of TPE into the participation constraint of the agent in an effort-in-advance P-A model. The governance regime explicitly involves interplay of three categories of the Northian enforcement, viz., first, second and third party enforcement. Weak and strong TPE are formally defined. We show that the general contract derived nests the usual textbook contract when TPE is strong; weak TPE on the other hand results in a strictly positive induced risk aversion which always exceeds the inherent risk aversion of the agent. This prevents the power of the contract to equal one even when the agent is risk-neutral, thus, rendering a fixed-rent contract sub-optimal. |
| Keywords: | sharecropping, weak TPE, endogenous type, induced risk aversion |
| JEL: | D23 D82 D86 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:phs:dpaper:201606&r=reg |