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on Regulation |
| By: | Anastasia Charalampidou (University of Strathclyde- Business School) |
| Abstract: | In the UK Continental Shelf (UKCS), private negotiations determine the terms of third party access to infrastructure and often hinder high complexity. Given the fact that the market is vertically integrated, where the infrastructure owners are also developers in their own producing fields, a misalignment of commercial and technical interests is observed. Considering the high capital cost of replicating existing infrastructure, the infrastructure owners, who are natural monopolies within their geographical market, find themselves gaining the bargaining advantage in the negotiations charging in several cases disproportionately high fees. In general, natural monopoly in capital intensive industries is linked with the concept of economies of scale- a situation where one firm can produce the market’s desirable output at a lower average cost comparing to two companies operating in a smaller scale. Therefore, economic literature views competition in the industry as socially undesirable as the existence of a large number of firms would result in needless duplication of capital equipment. Many authors emphasise also the fact that the extensive need for capital is probably the most important exogenous structural barrier. However, although production efficiency arguments suggest that network infrastructure should be provided by a single firm, economic inefficiencies, such as pricing to access, may arise due to unregulated market outcomes creating a case for government intervention in order to ensure that high levels of output grown are achieved. This research work is concerned with the economics of the UKCS oil and gas infrastructure, the ownership of transportation structures and the market inefficiencies under the existing regulatory environment. The issue of third party access is analysed by applying the economics of regulation of natural monopoly to the case of the pipeline transportation infrastructure in the North Sea. The economic and structural challenges the ultra-mature UK basin faces can have a potential negative effect on exploration outcomes not allowing, the full utilisation of the remaining reserves. The issue of access to UKCS infrastructure seems to adversely affect new entrants for undertaking exploration activities. The possibility for government intervention is linked with the maturity of the basin which changes the efficiency of natural monopoly that might require additional supervision. The market of oil and gas infrastructure networks could be efficient for the current participants but unable to attract new entrants. This research aims to analyse the effect of access in oil and gas infrastructure on exploration under the presence of incomplete contracts. |
| Keywords: | oil and gas industry, pipeline economics, natural monopoly, government intervention |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:4106452&r=reg |
| By: | Bernard Caillaud (PSE - Paris School of Economics, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC)); Gabrielle Demange (PSE - Paris School of Economics, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC)) |
| Abstract: | This paper analyzes the joint design of fiscal and cap-and-trade instruments in climate policies under uncertainty. Whether the optimal mechanism is a mixed policy (with some firms subject to a tax and others to a cap-and-trade) or a uniform one (with all firms subject to the same instrument) depends on parameters reecting preferences, production, and, most importantly, the stochastic structure of the shocks affecting the economy. This framework is then used to address the issue of the non-cooperative design of climate regulation systems in various areas worldwide under uncertainty. We characterize the resulting ineficiency, we show how the Pareto argument in favor of merging ETS of different regions is reinforced under uncertainty, and we discuss the non-cooperative design of mixed systems. |
| Keywords: | climate policies,cap-and-trade mechanisms,emission tax,uncertainty |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01112185&r=reg |
| By: | Eliana Carranza; Robyn Meeks |
| Abstract: | Overloaded electrical systems are a major source of unreliable power (outages) in developing countries. Using a randomized saturation design, we estimate the impact of energy efficient lightbulbs on household electricity consumption and local electricity reliability. Receiving compact fluorescent lightbulbs (CFLs) significantly reduced household electricity consumption. Estimates not controlling for spillovers in take-up underestimate the impacts of the CFLs, as control households near the treated are likely to take-up CFLs themselves. Greater saturation of CFLs within a transformer leads to aggregate reliability impacts of two fewer days per month without electricity due to unplanned outages relative to pure controls. Increased electricity reliability permits households to consume more electricity services, suggesting that CFL treatment results in technological externalities. The spillovers in take-up and technological externalities that we document may provide an additional explanation for the gap between empirical and engineering estimates of the impacts of energy efficient technologies. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:feb:natura:00569&r=reg |
| By: | E. Bacchiega; O. Bonroy; E. Petrakis |
| Abstract: | We study the optimal contract choice of an upstream monopolist producing an essential input that may sell to two vertically differentiated downstream firms. The upstream supplier can offer an exclusive contract to one of the firms or non-exclusive contracts to both firms. Each of the latter can be made contingent or not on the breakdown of the negotiations between the upstream supplier and the rival downstream firm. The distribution of bargaining power during the contract terms negotiations is the main driving force of the monopolist's choices. A powerful supplier always opts for an exclusive contract. By contrast, a weaker supplier offers non-exclusive contracts and makes each of them contingent or non-contingent such as to guarantee the most favorable outside option in its negotiations. Our main results hold under an horizontally differentiated downstream market too. |
| JEL: | D43 L13 L14 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp1079&r=reg |
| By: | Collins, Matthew; Curtis, John |
| Abstract: | The Sustainable Energy Authority of Ireland (SEAI) administers the Better Energy Homes (BEH) scheme to provide a financial incentive for home owners to engage in energy efficiency retrofits. This study analyses the BEH data and Building Energy Rating data for BEH-participant homes to examine the value for money achieved by households. In addition, this research identifies which retrofit combinations provide greatest value for money, in terms of energy efficiency gains, for the grant provider. We utilise an error-in-variables approach to model the variation in benefits accruing to households of varying characteristics. We find that household and grant provider surplus can be maximised in the short term by retrofitting less energy efficient and larger homes, timber or steel frame homes and houses rather and apartments. The types of retrofits leading to the greatest surplus for both households and the grant provider include cavity wall insulation paired with either a boiler with heating controls or heating controls only retrofit. |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp542&r=reg |
| By: | Zongjun Tan (LPMA - Laboratoire de Probabilités et Modèles Aléatoires - UPMC - Université Pierre et Marie Curie - Paris 6 - UP7 - Université Paris Diderot - Paris 7 - CNRS - Centre National de la Recherche Scientifique); Peter Tankov (LPMA - Laboratoire de Probabilités et Modèles Aléatoires - UPMC - Université Pierre et Marie Curie - Paris 6 - UP7 - Université Paris Diderot - Paris 7 - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We study the optimal trading policies for a wind energy producer who aims to sell the future production in the open forward, spot, intraday and adjustment markets , and who has access to imperfect dynamically updated forecasts of the future production. We construct a stochastic model for the forecast evolution and determine the optimal trading policies which are updated dynamically as new forecast information becomes available. Our results allow to quantify the expected future gain of the wind producer and to determine the economic value of the forecasts. |
| Keywords: | wind energy,forecasts,optimal trading policies,stochastic control |
| Date: | 2016–07–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01348828&r=reg |
| By: | McCoy, Daire; Curtis, John |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp539&r=reg |
| By: | Briglauer, Wolfgang; Dürr, Niklas S.; Falck, Oliver; Hüschelrath, Kai |
| Abstract: | We evaluate the impact of a major European state aid program for broadband deployment applied to rural areas in the German State of Bavaria in the years 2010 and 2011. Using difference-in-differences estimation strategies, we find that aided municipalities have - depending on broadband quality - a between 16.8 and 23.2 percent higher broadband coverage than non-aided municipalities. This increase in broadband coverage - closing the digital divide - results in an increase of on average seven employed individuals living in the respective aid-receiving municipalities while leaving the number of employed or selfemployed individuals or wages unaffected. We therefore conclude that an increase in broadband coverage through state aid prevents rural areas from depopulation, but does not contribute to a further closing of the economic divide in the form of creating new jobs. |
| Keywords: | government policy,state aid,ex-post evaluation,broadband,employment, rural areas,European Union,Germany,Bavaria |
| JEL: | D62 D73 G38 H23 J23 K23 L52 L96 L98 R23 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:16064&r=reg |
| By: | Dragan Ilic (University of Basel, Switzerland); Janick Christian Mollet (ETH Zurich, Switzerland) |
| Abstract: | The rationale of voluntary corporate initiatives is often explained with anticipation of future regulation. We test this hypothesis for the Chicago Climate Exchange (CCX) and the Climate Leaders (CL), two popular voluntary US environmental programs to curb carbon emission that were operating during a decisive regulatory event. In 2009 the Waxman-Markey Bill surprisingly passed the House of Representatives and brought the US economy a big step closer to a nationwide CO2 emission trading system. In an event study we assess how the stock market adjusted prices when the likelihood of CO2 regulation unexpectedly increased. We develop a simple model to investigate the empirical results. Our findings suggest that only membership in the CCX was considered beneficial, an initiative whose market oriented design happened to dovetail with the bill’s. Earlier stock market reactions to membership announcements in these voluntary programs paint a complementary picture. But membership alone cannot account for the entire price adjustments. Our results show that a substantial part of the market reaction can be traced back to industry-wide effects. |
| Keywords: | Voluntary markets, permit markets, climate change, greenhouse gas emissions, CO2, corporate social responsibility, shareholder wealth |
| JEL: | G38 Q53 Q54 Q58 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:16-261&r=reg |
| By: | Lunn, Pete; Bohacek, Marek |
| Abstract: | Two laboratory studies investigated the effect of price transparency on consumers’ decision-making in the residential electricity market. The first tested whether consumers have difficulties when confronted with unit prices expressed as discounts from standard rates, which vary between suppliers. Results showed that consumers were much more likely to choose packages with low unit prices when unit prices were presented explicitly rather than as discounts. When discounts were described as percentages, consumers’ decisions were also less accurate. The second study pre-tested the likely impact of a potential mandatory “estimated annual bill” (EAB) on marketing material, calculated for a customer with average usage. Results demonstrated that consumers were more likely to judge value according to unit prices when an EAB appeared on advertisements. Moreover, when unit prices were communicated via an EAB rather than a discount, consumers chose lower unit price offerings and were more precise in their decision-making. The findings suggest that the EAB is likely to be beneficial for consumers’ decision-making. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp543&r=reg |