nep-reg New Economics Papers
on Regulation
Issue of 2016‒10‒23
ten papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Electricity Externalities, Siting, and the Energy Mix: A Survey By Heinz Welsch
  2. Panel regression analysis of electricity prices and renewable energy in the European Union By Cech, Marek
  3. The Tragedy of the Last Mile: Congestion Externalities in Broadband Networks By Jacob Malone; Aviv Nevo; Jonathan Williams
  4. Cost-Sharing and Drug Pricing Strategies : Introducing Tiered Co-Payments in Reference Price Markets By Herr, Annika; Suppliet, Moritz
  5. The Impact of Electricity Production from Renewable Sources, Nuclear Source and the Conversion of Land Use into Agricultural Land on CO2 Emissions By Thi Thanh Xuan Tran
  6. Mechanism Design and Auctions for Electricity Network By Benjamin Heymann; Alejandro Jofré
  7. The Mailstream as a Platform By Christian Jaag; Christian Bach
  8. Description of European policies and issues related to electricity pricing By Cech, Marel; Janda, Karel
  9. The Impact of Special Economic Zones on Electricity Intensity of Firms By Ronald B. Davies; T. Huw Edwards; Arman Mazhikeyev
  10. Optimal trading policies for wind energy producer By Zongjun Tan; Peter Tankov

  1. By: Heinz Welsch (University of Oldenburg, Department of Economics)
    Abstract: While early literature on electricity externalities was largely concerned with fossil fuel power generation and the associated emissions, nuclear accidents (Chernobyl, Fukushima) and the large-scale deployment of renewable energy facilities have spurred a wave of research on the externalities of nuclear power and renewable energies. The issue is important because many countries have started reconsidering their energy policies, and the externalities from electricity generation play a major role in the benefit-cost analysis of relevant options. This paper reviews the literature on electricity-related externalities. It starts by discussing their nature and the methods employed in valuing them. It finds that appraisals of electricity externalities are complicated because of heterogeneity of both the externalities themselves and the methods applied in measuring them. The paper reviews valuation studies of the externalities from fossil fuel, nuclear and renewable sources, and it discusses the relevance of their findings for the siting of plants and the electricity mix. It concludes by pointing out gaps in our knowledge about electricity externalities that deserve to be addressed in future research.
    Keywords: electricity generation; externalities; fossil fuels; nuclear power; renewable energy; siting; electricity mix; property value; willingness to pay; subjective well-being
    JEL: Q48 Q42 Q51 Q53 Q54
    Date: 2016–10
  2. By: Cech, Marek
    Abstract: This paper provides an econometric panel data model with data collected from 13 member states of the European Union over the period between 2010 and 2013 analysing two energy and climate relationships. First, it investigates the impact of the share of renewable energy sources in the final electricity production on the European consumer electricity prices. Second, it analyzes whether the replacement of fossil fuels by renewable energy causes a significant decrease in the greenhouse gases (specifically carbon dioxide) emissions. The results of our model analysis suggest that household electricity prices in the studied countries increase with the deployment of renewable electricity production. On the contrary, a negative effect of the renewables used in energy consumption on the CO2 emissions produced was found by the model regression.
    Keywords: electricity price, renewable energy sources, energy policy, European Union
    JEL: Q20 Q40
    Date: 2016–10–16
  3. By: Jacob Malone (University of Georgia, Department of Economics); Aviv Nevo (University of Pennsylvania, Department of Economics); Jonathan Williams (University of North Carolina - Chapel Hill, Department of Economics)
    Abstract: We exibly estimate demand for residential broadband accounting for congestion externalities that arise among consumers due to limited network capacity, as well as dynamics arising from nonlinear pricing. Our high frequency data permits insight into temporal patterns in usage across the day that are impacted by network congestion, and how usage responds to efforts to mitigate congestion. To estimate demand, we build a dynamic model of consumer choice and rely on variation in the timing of network upgrades and nonlinear pricing to identify the model. Using the model estimates, we calculate the welfare changes associated with different economic and technological solutions for reducing congestion, including peak-use pricing, throttling connectivity speeds, and local-cache technologies.
    Keywords: demand; broadband; congestion; peak-use pricing
    JEL: L11 L13 L96
    Date: 2016–09
  4. By: Herr, Annika; Suppliet, Moritz (Tilburg University, Center For Economic Research)
    Abstract: Health insurances curb price insensitive behavior and moral hazard of insureds through different types of cost-sharing, such as tiered co-payments or reference pricing. This paper evaluates the effect of newly introduced price limits below which drugs are exempt from co-payments on the pricing strategies of drug manufacturers in reference price markets. We exploit quarterly data on all prescription drugs under reference pricing available in Germany from 2007 to 2010. To identify causal effects, we use instruments that proxy regulation intensity. A difference-in-differences approach exploits the fact that the exemption policy was introduced successively during this period. Our main results first show that the new policy led generic firms to decrease prices by 5 percent on average, while brand-name firms increase prices by 7 percent after the introduction. Second, sales increased for exempt products. Third, we find evidence that differentiated health insurance coverage (public versus private) explains the identifed market segmentation.
    Keywords: pharmaceutical prices; cost-sharing; co-payments; reference pricing; regulation; firm behavior; health insurance
    JEL: I1 L11
    Date: 2016
  5. By: Thi Thanh Xuan Tran (CREM - Centre de Recherche en Economie et Management - UR1 - Université de Rennes 1 - Université de Caen Basse-Normandie - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper attempts to introduce factors which are linked to the sources of CO2 emissions using a standard scale, technique and composition approach. In their early work, Grossman & Krueger (1991) suggest that the impact of economic factors such as growth and trade on the environment can be decomposed into scale, technique and composition effects. Later work of Antweiler et al. (1998) provides a well-completed theoretical guideline that allows researchers to estimate separately these 3 effects. However, studies of Cole & Elliott (2003) and Managi et al. (2009), while providing partial support for Antweiler et al., show that the relationship between economic factors and pollution vary by pollutant given the differences between many common pollutants, "particularly with regards to their sources" (Cole & Elliott (2003)). Thus, this study contributes to this literature and pay attention to variables which are linked to the sources of CO2 emissions. Since electricity production and the conversion of land use into agricultural land are two main single sources of carbon dioxide emissions, I examine these impact on per capita CO2 emissions. The results of estimation for a panel of 99 countries spanning the period 1971-2010 indicate that :(1) increasing the share in electricity production from nuclear and renewable sources can decrease CO2 emissions whereas (2) the conversion of land use into agriculture land raises the amount of carbon emitted.
    Keywords: Trade openness, Nuclear energy, Agricultural land, CO2 emissions,Renewable energy, Scale-technique-composition
    Date: 2016–04–10
  6. By: Benjamin Heymann (Commands - Control, Optimization, Models, Methods and Applications for Nonlinear Dynamical Systems - CMAP - Centre de Mathématiques Appliquées - Ecole Polytechnique - Polytechnique - X - CNRS - Centre National de la Recherche Scientifique - INRIA Saclay - Ile de France - Inria - Institut National de Recherche en Informatique et en Automatique - ENSTA ParisTech UMA - Unité de Mathématiques Appliquées - Univ. Paris-Saclay, ENSTA ParisTech - École Nationale Supérieure de Techniques Avancées - Univ. Paris-Saclay, ENSTA ParisTech - École Nationale Supérieure de Techniques Avancées - Polytechnique - X - CNRS - Centre National de la Recherche Scientifique, CMAP - Centre de Mathématiques Appliquées - Ecole Polytechnique - Polytechnique - X - CNRS - Centre National de la Recherche Scientifique); Alejandro Jofré (CMM - Center for Mathematical Modeling - Universidad de Chile [Santiago])
    Abstract: We present some key aspects of wholesale electricity markets modeling and more specifically focus our attention on auctions and mechanism design. Some of the results arising from those models are the computation of an optimal allocation for the Independent System Operator, the study of the equilibria (existence and unicity in particular) and the design of mechanisms to increase the social surplus. From a more general perspective, this field of research provides clues to discuss how wholesale electricity market should be regulated. We start with a general introduction and then present some results the authors obtained recently. We also briefly expose some undergoing related work. As an illustrative example, a section is devoted to the computation of the Independent System Operator response function for a symmetric binodal setting with piece-wise linear production cost functions.
    Date: 2016–05–13
  7. By: Christian Jaag; Christian Bach
    Abstract: This paper interprets the postal mailstream as a platform with two market sides in a theoretical model: On the one side of the market, advertisers (senders of direct mail) and senders of transactional mail are customers for mail services. On the other side of the market, there are the recipients. The value of direct mail for its sender depends on the quality of the mailmix, i.e. the number of transactional mail items in the mailstream. Hence, there is an interdependency between the two types of mail. This interdependency effects the equilibrium allocation, especially optimal prices. The paper analyzes these effects in two frameworks: A postal monopoly and (direct) postal competition within the mailstream as a platform. It also discusses their implications for (indirect) competition with other communication platforms. A postal monopolist has a strong incentive to lower transactional mail's price in order to increase the mail platform's attractiveness for direct mail. Electronic substitution of transactional mail thwarts these efforts. In addition, direct competition degrades the mailmix because new postal operators tend to focus on bulk and direct, rather than transactional mail. Thereby, direct competition indirectly contributes to the substitution of direct mail.
    Keywords: Postal Sector, Platform, Two-sided market
    JEL: L43 L51
    Date: 2016–04
  8. By: Cech, Marel; Janda, Karel
    Abstract: This paper is focused on the description of institutional, technical, economic, legal and other relevant issues of electricity pricing in the European Union connected with the increasing use of renewable energy sources in electricity production and consumption. It provides background information related to the types of energy sources along with the summary of their advantages and disadvantages regarding both the environmental impact and financial costs. Furthermore, it involves fundamental global and European electricity production statistics and a summary of the European Union approach to the support of environment-friendly energy production methods.
    Keywords: electricity price, energy sources, renewable energy sources, energy policy, European Union
    JEL: Q20 Q40
    Date: 2016–10–16
  9. By: Ronald B. Davies; T. Huw Edwards; Arman Mazhikeyev
    Abstract: In light of concerns over the environmental impact of Special Economic Zones located in developing countries, where environmental regulation is weak, we analyse the electricity intensity of firms in SEZs. We use firm level data from Africa and Asia, and we find that SEZ firms have higher electricity intensity as opposed to non-SEZ firms. If they also face higher fiscal, financial or environmental regulations, the electricity intensity of firms in SEZs increases by a greater rate as opposed to non-SEZ firms. As such, establishing SEZs may have significant environmental implications.
    Keywords: Energy intensity; Special economic zones
    JEL: F14 J16
    Date: 2016–10
  10. By: Zongjun Tan; Peter Tankov
    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.
    Date: 2016–09

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