nep-reg New Economics Papers
on Regulation
Issue of 2016‒11‒06
ten papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. The Rebound Effect in Residential Electricity Use: Evidence from a Propensity Score Matching Estimator By Kenichi Mizobuchi; Kenji Takeuchi
  2. The Future Expansion of HVDC Power Transmission in Brazil: A Scenario-Based Economic Evaluation By Köhnke Mendonça, Christian; Oberst, Christian A.; Madlener, Reinhard
  3. Limit Pricing, Climate Policies, and Imperfect Substitution By Gerard van der Meijden; Cees Withagen
  4. Rockets and feathers: Asymmetric pricing and consumer search - Evidence from electricity retailing By Heim, Sven
  5. Carbon pricing, forward risk premiums and pass-through rates in Australian electricity futures markets By Pawel Maryniak; Stefan Trueck; Rafal Weron
  6. Providing efficient network access to green power generators: A long-term property rights perspective By Georgios Petropoulos; Bert Willems
  7. Dynamic Nonmonetary Incentives By Daniel Bird; Alexander Frug
  8. “Climate Change Mitigation and the Role of Technologic Change: Impact on selected headline targets of Europe’s 2020 climate and energy package ” By Germá-Bel; Stephan Josep
  9. The effects of competition on medical service provision By Brosig-Koch, Jeannette; Hehenkamp, Burkhard; Kokot, Johanna
  10. Policy networks in energy transitions: The cases of carbon capture and storage and offshore wind in Norway By Håkon Endresen Normann

  1. By: Kenichi Mizobuchi (Department of Economics, Matsuyama University); Kenji Takeuchi (Graduate School of Economics, Kobe University)
    Abstract: By combining the propensity score matching with the difference-in-differences method, we examine the change in household electricity consumption that might be caused by the replacement of air-conditioners. The result suggests that the replacement to energy-efficient air-conditioners might decrease power consumption, especially in spring and summer. Furthermore, based on our estimation result, we calculate the size of the rebound effect monthly. The size of the rebound varies considerably with the seasons. We found positive rebound in summer (8% to 22% in August) and winter (134% to 192% in December and January). On the other hand, negative rebound, implying that the actual power-saving effect is greater than the expected saving effect, was found in mild-climate seasons (?3% to ?129%). The average size of the rebound is positive and ranges between 45% and 58%.
    Keywords: Fractal geometry, Hurst exponent, market efficiency, chaos
    JEL: C18 E39 G14
    Date: 2016–10
  2. By: Köhnke Mendonça, Christian (RWTH Aachen University); Oberst, Christian A. (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: We discuss the expected future needs of the Brazilian electric grid operators for High Voltage Direct Current (HVDC) transmission lines against the background of a changing electricity sector in Brazil. On account of the spatial mismatch between the additional generation potential and the expected future electricity demand, a need for investments in long-distance transmission capacity is postulated. Due to the low losses incurred, HVDC technology is particularly suitable for this. For the analysis, we use different expansion scenarios for the year 2035 that are mainly based on hydropower or alternative renewable energy sources (primarily wind and solar power). Linear optimization is used to determine the optimal HVDC transmission lines to connect regions. The results show that large investments in HVDC transmission are needed, especially in the case of hydropower expansion, and that transmission capacity is a critical factor in the process of expanding the renewable energy generation capacity in Brazil.
    Keywords: HVDC transmission lines; Grid planning; Energy transition; Spatial mismatch
    JEL: H54 L94 Q40
    Date: 2015–08
  3. By: Gerard van der Meijden (VU University Amsterdam, the Netherlands); Cees Withagen (VU University Amsterdam, the Netherlands)
    Abstract: The effects of climate policies are often studied under the assumption of perfectly competitive markets for fossil fuels. In this paper, we allow for monopolistic fossil fuel supply. We show that, if fossil and renewable energy sources are perfect substitutes, a phase will exist during which the monopolist chooses a limit pricing strategy. If limit pricing occurs from the beginning, a renewables subsidy increases initial extraction, whereas a carbon tax leaves initial extraction unaffected. However, if the initially fossil fuels are cheaper than renewables, a renewables subsidy and a carbon tax lower initial extraction, contrary to the case under perfect competition. Both policy instruments lower cumulative extraction. If fossil fuels and renewables are imperfect but good substitutes, the monopolist will exhibit `limit pricing resembling' behavior, by keeping the effective price of fossil close to that of renewables for considerable time. The empirical question whether energy demand is elastic or inelastic has less drastic implications for the fossil price and extraction paths than under perfect substitutability.
    Keywords: Limit pricing; non-renewable resource; monopoly; climate policies
    JEL: Q31 Q42 Q54 Q58
    Date: 2016–10–21
  4. By: Heim, Sven
    Abstract: Recent theories suggest that consumers' search efforts are a function of prices and prices changes, respectively. This may help to explain the 'rockets and feathers' phenomenon often assigned to collusion - prices rise like rockets when costs increase and fall like feathers when costs decrease. This paper empirically investigates the relation between cost pass-through and consumer search intensity for the German electricity retail market utilizing a unique panel dataset on retail electricity prices and consumer search intensity at online comparison sites for retail electricity, both at the zip code level. The main findings are 1) consumers search non-linear with regard to prices and price changes. They search more when prices are high and they decrease search efforts substantially when prices fall but only increase search efforts slightly when prices rise, 2) costs are passed-through asymmetrically with positive cost shocks causing higher pass-through rates than cost decreases and 3) search intensity significantly impacts price adjustments and controlling for search intensity eliminates large parts of the asymmetry. I compare this finding with a counterfactual - the entrants - where all consumers are fully informed. In this case consumer search does not affect cost pass-through.
    Keywords: Information,Cost Pass-through,Consumer Search,Rockets and Feathers
    JEL: D83 L11
    Date: 2016
  5. By: Pawel Maryniak; Stefan Trueck; Rafal Weron
    Abstract: We investigate the impacts of the carbon tax (effective July 2012 to July 2014) on wholesale electricity prices in the Australian National Electricity Market (NEM). Analyzing spot and futures contracts in four major regional markets, we first compute ex-ante forward risk premiums in the pre-tax period, then use them to derive market-implied carbon premiums and pass-through rates in the carbon tax and post-tax periods. We find that carbon premiums and pass-through rates became increasingly higher, once the Clean Energy Bill had been introduced and subsequently passed in 2011. We also find strong evidence for a quick reaction of the extracted carbon premiums to changes in opinion polls for the Australian federal election in 2013 and the decision to repeal the tax. On the other hand, during periods where market participants could be relatively certain that the tax would be effective, we find expected carbon pass-through rates between 65% and 140%, which seem to be inversely related to emission intensities.
    Keywords: Carbon tax; Carbon pass-through rate; Forward risk premium; Electricity market; Spot and futures prices
    JEL: C51 C53 G13 Q41 Q58
    Date: 2016–11–02
  6. By: Georgios Petropoulos; Bert Willems
    Abstract: Coordinating the timing and location of new production facilities is one of the challenges of liberalized power sectors. It is complicated by the presence of transmission bottlenecks, oligopolistic competition, and the unknown prospects of low-carbon technologies. The authors build a model encompassing a late and early investment stage, a clean (green) and dirty (brown) technologies, and a single transmission bottleneck and compare dynamic efficiency of several market designs. Allocating network access on a short-term competitive basis distorts investment decisions as brown firms will pre-empt green competitors by investing early. Compensating early investors for future network congestion, as for instance in the E.U., only exacerbates this problem. Dynamic efficiency is restored with long-term transmission rights that can be traded on a secondary market (iusvendendi). As early investment lowers the resale value of the transmission rights, brown firms will invest optimally. The authors show that dynamic efficiency does not require the existence of physical rights for accessing the transmission line (ius utendi), but financial rights on receiving the scarcity revenues generated by the transmission line (ius fructendi) suffice.
    Date: 2016–11
  7. By: Daniel Bird; Alexander Frug
    Abstract: We study a principal-agent interaction where investments and rewards arrive stochastically over time, and are privately observed by the agent. Investments (costly for the agent, beneficial for the principal) can be concealed by the agent. Rewards (beneficial for the agent, costly for the principal) can be forbidden by the principal. We ask how rewards should be used and which investments incentivized. We identify the unique optimal mechanism and analyze the dynamic investment and compensation policies. When all rewards are identical, the unique optimal way to provide incentives is by a "carte-blanche" to pursue all rewards arriving in a predetermined timeframe.
    Keywords: dynamic mechanism design, uncertain action availability
    JEL: D82
    Date: 2016–10
  8. By: Germá-Bel (Departament of Economic Policy & GiM-IREA, University of Barcelona. Av. Diagonal 696; 08034 Barcelona, Spain.); Stephan Josep (Departament of Economic Policy & GiM-IREA, University of Barcelona. Av. Diagonal 696; 08034 Barcelona, Spain.)
    Abstract: The European Union launched a set of policies as part of its 2020 climate and energy package aimed at meeting its 20/20/20 headline targets for smart, sustainable and inclusive growth. This paper evaluates how successful new-to-the-market climate change mitigation technologies (CCMT) are in helping EU member states (MS) to reach these goals and, furthermore, whether there are differences between sectors subject to EU-wide polices. To do so, we seek to relate CCMT patent counts to two specific headline targets: (1) achieving 20% of gross final energy consumption from renewables, and (2) achieving a 20% increase in energy efficiency. Our results provide the first ex-post evaluation of the effectiveness of these technologies for combating climate change. Moreover, our sectoral impact assessment points to significant differences in the way in which these technologies contribute to policy goals across sectors.
    Keywords: Environmental Policy; Climate Change; Technological Change; Patent Count Data. JEL classification: O33; O38; Q55; Q58.
    Date: 2016–10
  9. By: Brosig-Koch, Jeannette; Hehenkamp, Burkhard; Kokot, Johanna
    Abstract: We explore how competition between physicians affects medical service provision. Previous research has shown that, without competition, physicians deviate from patient-optimal treatment under payment systems like capitation and fee-for-service. While competition might reduce these distortions, physicians usually interact with each other repeatedly over time and only a fraction of patients switches providers at all. Both patterns might prevent competition to work in the desired direction. To analyze the behavioral effects of competition, we develop a theoretical benchmark which is then tested in a controlled laboratory experiment. Experimental conditions vary physician payment and patient characteristics. Real patients benefit from treatment decisions made in the experiment. Our results reveal that, in line with the theoretical prediction, introducing competition can reduce overprovision and underprovision, respectively. The observed effects depend on patient characteristics and the payment system, though. Tacit collusion is observed and particularly pronounced with fee-for-service payment, but it appears to be less frequent than in related experimental research on price competition.
    Abstract: In der vorliegenden Studie untersuchen wir, wie sich Wettbewerb zwischen Ärzten auf deren Behandlungsentscheidungen auswirkt. Bisherige Forschungsergebnisse zeigen, dass ohne Wettbewerb die Behandlungsentscheidungen von Ärzten bei klassischen Vergütungssystemen wie der Einzelleistungsvergütung oder der Kopfpauschale von den patientenoptimalen Entscheidungen abweichen. Während diese Abweichungen grundsätzlich durch Wettbewerb reduziert werden könnten, ist davon auszugehen, dass Ärzte typischerweise wiederholt miteinander interagieren und dass nur ein Teil der Patienten den Arzt wechselt. Beides könnte die positiven Effekte des Wettbewerbs verringern. Um die Verhaltenswirkungen von Wettbewerb zu analysieren, entwickeln wir ein spieltheoretisches Modell, das wir mit Hilfe kontrollierter Laborexperimente testen. Die experimentellen Anordnungen variieren bezüglich der Arztvergütung und der Charakteristika der Patienten. Reale Patienten profitieren von den im Experiment getroffenen Behandlungsentscheidungen. Unsere Ergebnisse zeigen, dass Wettbewerb im Einklang mit der theoretischen Prognose Überbehandlung und Unterbehandlung reduzieren kann. Die beobachteten Effekte hängen jedoch von den Charakteristika der Patienten und der Arztvergütung ab. Wir finden auch stillschweigende Kollusion, insbesondere bei der Einzelleistungsvergütung. Diese tritt jedoch in geringerem Ausmaß auf als in vergleichbaren experimentellen Studien zum Preiswettbewerb.
    Keywords: physician competition,fee-for-service,capitation,laboratory experiment
    JEL: I11 D43 C91 C72
    Date: 2016
  10. By: Håkon Endresen Normann (TIK Centre, University of Oslo)
    Abstract: This paper employs the concept of policy networks to study how interest groups and actors compete over the influence of energy and climate policy. It is argued that the creation of learning arenas is critical for the development of immature technologies. The paper then analyses two large efforts to secure state funding of large-scale demonstration projects for offshore wind and carbon capture and storage technology in Norway. The paper describes a range of similarities between these two technologies in terms of scale, maturity, and costs, and in the way they represent possible solutions to the problem of climate change. However, the paper also describes enormous differences in government support towards full-scale demonstration. These differences are then explained in the analysis, which shows how different network structures facilitate different levels of access to the policy making process. The paper provides insights into how the interests of political parties influence the potency for solutions tied to climate and energy problems. The paper therefore contributes to the discourse on the role of politics in sustainable transitions.
    Date: 2016–10

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