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on Regulation |
| By: | Valeria Di Cosmo (Fondazione Enrico Mattei); Laura Malaguzzi Valeri (Economic and Social Research Institute) |
| Abstract: | We evaluate how increasing wind generation affects wholesale electricity prices, balancing payments and the cost of subsidies using the Irish Single Electricity Market (SEM) as a test system, with hourly data from 1 January 2008 to 28 August 2012. We measure the effect of wind on the marginal cost of generating electricity using a system of seemingly unrelated regressions (SUR) where the regressions are the 24 hours of the day. Wind has a negative impact on the system marginal price. In particular, every MWh increase in wind generation (equal to about 0.2% of the average wind generation in our sample) leads to a decrease of the system marginal price of €0.018/MWh, or about 0.3% of its average value in our sample. Using time series models we show that wind generation increases balancing payments, as do the forecast errors of demand and wind. Lack of storage significantly increases the impact of wind on balancing payments whereas the lack of interconnection has no effect. Overall, wind decreases costs through its effect on the electricity price more than it increases constraint payments, even when storage is on outage. The effect of wind remains positive after including the subsidies given to wind generation. |
| Keywords: | Wind generation, constraints, storage, interconnection, wind subsidies |
| JEL: | L94 Q42 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:doc2016-30&r=reg |
| By: | Abrell, Jan; Rausch, Sebastian |
| Abstract: | This paper analyzes hybrid emissions trading systems (ETS) under partitioned environmental regulation when firms’ abatement costs and future emissions are uncertain. We show that hybrid policies that introduce bounds on the price or the quantity of abatement provide a way to hedge against differences in marginal abatement costs across partitions. Price bounds are more efficient than abatement bounds as they also use information on firms’ abatement technologies while abatement bounds can only address emissions uncertainty. Using a numerical stochastic optimization model with equilibrium constraints for the European carbon market, we find that introducing hybrid policies in EU ETS reduces expected excess abatement costs of achieving targeted emissions reductions under EU climate policy by up to 89 percent. We also find that under partitioned regulation there is a high likelihood for hybrid policies to yield sizeable ex-post cost reductions. |
| JEL: | H23 Q54 C63 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145726&r=reg |
| By: | Xinying Fu (VU Amsterdam, The Netherlands); Vincent A.C. van den Berg (VU Amsterdam, Tinbergen Institute, The Netherlands); Erik T. Verhoef (VU Amsterdam, Tinbergen Institute, The Netherlands) |
| Abstract: | We study the efficiency of private supply of roads under demand uncertainty and evaluate various regulatory policies. Due to demand uncertainty, capacity is decided before demand is known, but tolls can be adjusted after demand is known. Policy implications can differ considerably from those under deterministic demand. For instance, for serial links, the toll in the second-best zero-profit case is no longer equal to the marginal external congestion cost. In the first-best scenario, the capacity under uncertain demand is higher than that under deterministic demand of the same expected value, though self-financing still holds in expected terms. Regulation by competitive auction cannot replicate the second-best zero-profit result and thus leads to a lower welfare, whereas without uncertainty various forms of competitive auctions can attain this second-best optimum. For more complex networks, when private firms add capacity in turn, contrary to the case without demand uncertainty, some form of auction performs better than others with demand uncertainty. |
| Keywords: | Traffic Congestion; Road Pricing; Uncertain Demand; Road Network; Private Supply; Auction |
| JEL: | D63 H23 R41 R42 |
| Date: | 2017–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20170026&r=reg |
| By: | Koen Frenken |
| Abstract: | The sudden rise of the sharing economy has sparked an intense public debate about its definition, its effects and its future regulation. Here, I attempt to provide analytical guidance by defining the sharing economy as the practice that consumers grant each other temporary access to their under-utilized physical assets. Using this definition, the rise of the sharing economy can be understood as occurring at the intersection of three salient economic trends: peer-to-peer exchange, access over ownership and circular business models. I shortly discuss some of the environmental impacts of online sharing platforms and then articulate three possible futures of the sharing economy: a capitalist future cumulating into monopolistic super-platforms allowing for seamless services, a state-led future that shifts taxation from labour to capital and redistributes the gains of sharing from winners to losers, and a citizen-led future based on cooperatively owned platforms under democratic control. The nature and size of the social and environmental impacts are expected to differ greatly in each of the three scenarios. |
| Keywords: | sharing economy, circular economy, access economy, peer-to-peer markets, sustainable consumption, collaborative consumption |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:uis:wpaper:1701&r=reg |
| By: | Andor, Mark; Gerster, Andreas; Sommer, Stephan |
| Abstract: | Energy labels have been introduced in many countries to make consumers more attentive to energy use in purchase decisions of durables. Despite their wide application, however, little is known about the effects of specific label designs. In this paper, we explore how energy labels can help to address inattention of consumers to energy efficiency. Our analysis is based on a (randomized controlled) discrete choice experiment among about 5,000 households in which we implement treatments that vary the label design. We find that supplementing the label with annual cost information increases attention to operating cost and promotes the choice of durables with higher energy efficiency. Moreover, simplifying the label has similar positive effects, most notably for individuals with low education. Finally, we show that a substantial share of individuals employ decision heuristics, focusing primarily on efficiency classes while neglecting more detailed information on energy consumption. |
| JEL: | D12 D83 Q48 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145778&r=reg |
| By: | Hanna-Liisa Kangas; David Lazarevic (Royal Institute of Technology (KTH)); Paula Kivimaa (Government of the Republic of Finland - Finnish Environment Institute) |
| Abstract: | Energy inefficiency in the building stock is a substantial contributor to climate change. Integrated energy service companies (IESCs) have a potentially important role in improving energy efficiency. However, there are numerous barriers to energy efficiency, preventing the growth of energy service markets. We analyse energy efficiency barriers to overcoming the energy efficiency gap in the Finnish building sector. Taking a novel supply side perspective, we place IESCs at the centre of the emerging energy services business ecosystem to identify the barriers and hindering factors (real world illustrations of barriers). From this perspective, we also examine cause-effect relationships between the hindering factors and the actors. Hindering factors, reported by IESCs, were categorised under a revised barrier taxonomy consisting of economic market failures and economic market, behavioural, organisational and institutional barriers. The most salient hindering factors—lack of technical skills, disinterest in energy efficiency improvements and non-functional regulation—were analysed with respect to ecosystem actors causing and affected by these factors. Public actors have a key role in overcoming these barriers, for instance by creating new possibilities for entrants to take part in decision-making, increasing the functionality and practicality of policies and by providing up-to date energy efficiency information. |
| Keywords: | Energy services; barriers; energy efficiency; ecosystem; energy service company; buildings |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:sru:ssewps:2017-04&r=reg |
| By: | Wohlschlegel, Ansgar; Feess, Eberhard; Mueller, Helge |
| Abstract: | We use a unique dataset from a German health insurer to study how the effects of the introduction of a high powered incentive scheme for hospitals on cost effectiveness and quality of medical treatment depend on case and hospital characteristics. As hospitals had a transition period of several years to complete the switch from a fee-for-service to a prospective-payment system, we can adopt a difference-in-differences approach. All hospitals had to switch eventually, which limits the potential for selection bias. Furthermore, we can follow a patient even when readmitted to a different hospital. We find that the readmission rate increases for more severe cases, and that the length of stay of older people decreases more under the new system. The average length of stay did not change significantly but the readmission rate increased. However, this latter effect is absent in privately owned or university hospitals. |
| JEL: | I11 D22 I18 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145776&r=reg |
| By: | Eleftheriou, Konstantinos; Michelacakis, Nickolas |
| Abstract: | We consider a vertically structured market with two retail firms of mixed ownership competing against each other exercising spatial price discrimination. We examine the strategic behavior of downstream rivals as well as the effect of privatization on the intensity of competition and welfare in two cases; when location decisions are taken sequentially and when location decisions are taken simultaneously. We show that production cost differentials are crucial in determining the Nash equilibrium locations (hence market shares) and the impact of the degree of privatization on the level of downstream competition. Privatization leads to stiffer competition when the mixed ownership firm has the cost advantage. However, it can be welfare enhancing only when decisions are taken sequentially with the follower being the semi-public firm having a moderate production cost advantage over the market leader. The results of our model generalize to capture the case of vertical mergers. |
| Keywords: | mergers; mixed oligopoly; privatization; spatial competition |
| JEL: | L13 L33 L42 R32 |
| Date: | 2017–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:76964&r=reg |