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on Regulation |
| By: | Nachtigall, Daniel |
| Abstract: | This paper analyzes the impact of declining extraction costs of shale oil producers on the choice of the policy instrument of a climate coalition in the presence of a monopolistic oil supplier such as OPEC. Shale oil producers' extraction costs represent an upper bound for the oil price OPEC can charge. Declining extraction costs ultimately limit OPEC's price setting behavior and thus impacts the optimal climate policy of the climate coalition. A pure cap-and-trade system is weakly welfare-inferior relative to a carbon tax for the climate coalition. While high extraction costs allow OPEC to appropriate the whole climate rent in case of quantity regulation, declining extraction costs imply OPEC to capture only a part of the climate rent. A carbon tax always generates positive revenue and thus is welfare-superior in general. However, low extraction costs prevent OPEC from exerting its market power, leading the climate coalition to implement the Pigouvian tax in the first place. Both market-based instruments are equivalent in this case. Complementing a quota with a base tax cannot outperform a pure carbon tax. |
| Keywords: | fossil fuel taxation,prices versus quantities,international redistribution,global warming |
| JEL: | H23 Q31 Q54 Q58 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:20176&r=reg |
| By: | Florian Ziel; Rick Steinert |
| Abstract: | The liberalization of electricity markets and the development of renewable energy sources has led to new challenges for decision makers. These challenges are accompanied by an increasing uncertainty about future electricity price movements. The increasing amount of papers, which aim to model and predict electricity prices for a short period of time provided new opportunities for market participants. However, the electricity price literature seem to be very scarce on the issue of medium- to long-term price forecasting, which is mandatory for investment and political decisions. Our paper closes this gap by introducing a new approach to simulate electricity prices with hourly resolution for several months up to three years. Considering the uncertainty of future events we are able to provide probabilistic forecasts which are able to detect probabilities for price spikes even in the long-run. As market we decided to use the EPEX day-ahead electricity market for Germany and Austria. Our model extends the X-Model which mainly utilizes the sale and purchase curve for electricity day-ahead auctions. By applying our procedure we are able to give probabilities for the due to the EEG practical relevant event of six consecutive hours of negative prices. We find that using the supply and demand curve based model in the long-run yields realistic patterns for the time series of electricity prices and leads to promising results considering common error measures. |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1703.10806&r=reg |
| By: | Ke Wang; Jieming Zhang; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology) |
| Abstract: | The trend toward a more fiercely competitive and strictly environmentally regulated electricity market in several countries, including China has led to efforts by both industry and government to develop advanced performance evaluation models that adapt to new evaluation requirements. Traditional operational and environmental efficiency measures do not fully consider the influence of market competition and environmental regulations and, thus, are not sufficient for the thermal power industry to evaluate its operational performance with respect to specific marketing goals (operational effectiveness) and its environmental performance with respect to specific emissions reduction targets (environmental effectiveness). As a complement to an operational efficiency measure, an operational effectiveness measure not only reflects the capacity of an electricity production system to increase its electricity generation through the improvement of operational efficiency, but it also reflects the system¡¯s capability to adjust its electricity generation activities to match electricity demand. In addition, as a complement to an environmental efficiency measure, an environmental effectiveness measure not only reflects the capacity of an electricity production system to decrease its pollutant emissions through the improvement of environmental efficiency, but it also reflects the system¡¯s capability to adjust its emissions abatement activities to fulfill environmental regulations. Furthermore, an environmental effectiveness measure helps the government regulator to verify the rationality of its emissions reduction targets assigned to the thermal power industry. Several newly developed effectiveness measurements based on data envelopment analysis (DEA) were utilized in this study to evaluate the operational and environmental performance of the thermal power industry in China during 2006-2013. Both efficiency and effectiveness were evaluated from the three perspectives of operational, environmental, and joint adjustments to each electricity production system. The operational and environmental performance changes over time were also captured through an effectiveness measure based on the global Malmquist productivity index. Our empirical results indicated that the performance of China¡¯s thermal power industry experienced significant progress during the study period and that policies regarding the development and regulation of the thermal power industry yielded the expected effects. However, the emissions reduction targets assigned to China¡¯s thermal power industry are loose and conservative. |
| Keywords: | Efficiency; Environmental effectiveness; Joint performance; Operational effectiveness |
| JEL: | Q54 Q40 |
| Date: | 2017–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:biw:wpaper:100&r=reg |
| By: | Collins, Matthew; Curtis, John |
| Abstract: | Improving the energy efficiency of residential dwellings is seen by policy-makers as an important contributor to the mitigation of climate change, a topic of ever increasing interest. Many countries have put in place policies aimed at stimulating the adoption of energy efficiency retrofit measures in private households. These policies generally focus on reducing costs to home owners, which in turn increases the net benefit of retrofitting, making a retrofit more attractive. We examine the drivers of retrofitting from an information point of view, looking mainly at how expected gross benefits can be increased as a means of inducing retrofitting activities. Using survey data, we examine how perceived effects of retrofitting impact on the likelihood that a home owner possesses an expressed interest in engaging in certain retrofit measures. We find the existence of information asymmetries in many cases between those who have and have not engaged in retrofit measures, while asymmetries are present in almost all instances between those who possess an expressed interest in retrofitting and those who do not. The most effective information that can be used to bridge this asymmetry and could lead to a greater interest in retrofitting among home owners are centred around energy costs and comfort. Perceived impacts of retrofitting on occupant health, property value and mould growth are not found to be significant drivers of interest in retrofitting. |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp558&r=reg |
| By: | Arlan Brucal; Michael Roberts |
| Abstract: | How do energy efficiency standards affect consumer welfare? To answer this question the authors look at how these standards have affected the price and quality of major appliances – including washing machines, fridges, room air conditioners and clothes dryers – sold in the US between 2001 and 2011. Using a novel index that uses the same-model price changes of appliances to disentangle price changes from perceived quality changes, they derive welfare effects as functions of changes in price and quality as energy-efficiency standards became more stringent. Contrary to common belief, the authors find an indication that prices declined while quality and consumer welfare increased, especially when more stringent energy efficiency standards were enforced. They also find that much of the price decline is attributed to standards-induced innovation and not from competition between manufacturers. The results and technique generate methodological insights in accounting for quality adjustments in price indexing. |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:lsg:lsgwps:wp266&r=reg |
| By: | Matthias Fripp (University of Hawaii Economic Research Organization (UHERO)) |
| Abstract: | This report outlines the effect that electric vehicles could have on the cost of transport and electricity production in the context of a 100% renewable power system (RPS). Results presented here were produced using the SWITCH power system planning model, configured to choose a least-cost plan to achieve 100% renewable power on Oahu by 2045, subject to a 5% limit on biofuel usage. |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:hae:wpaper:2017-3&r=reg |
| By: | INOUE Hiroyasu; NAKAJIMA Kentaro; SAITO Yukiko |
| Abstract: | This paper investigates how the reduction of the travel costs through improvement in transportation infrastructure lead to knowledge diffusion. Using the case of the opening of the Nagano-Hokuriku shinkansen, and applying the difference-in-differences approach, we estimate the impact of the high-speed rail on innovative activities along the line. We find that after the opening of the high-speed rail, innovative activities by establishments along the line significantly increased. Furthermore, collaborative patents across establishments along the line and citations of patents published by the establishments in Tokyo increased. These imply that the innovative activities along the line are increased through knowledge diffusion from nearby establishments and those in Tokyo. |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:17034&r=reg |
| By: | Georg Zachmann |
| Abstract: | The issue Mitigating greenhouse gas emissions is more difficult in some countries than in others. International emissions trading can help to reduce the overall cost of mitigation and ensure that companies in different countries face the same carbon price. Lower costs and tackling competitiveness concerns can enable higher levels of climate ambition. The Paris Agreement explicitly provides for international emissions trading, but the rules governing trading still need to be determined. In the absence of strict rules, international emissions trading might become a loophole leading to reduced climate ambition. And because of its consensus requirements, the United Nations process is unlikely to lead to comprehensive rules. To fill this gap, the European Union should engage with other nations to determine a set of rules that can serve as a gold standard for emissions trading anywhere in the world. Policy challenge The effort to define rules for international emissions trading faces the strong desire of nation states to develop their own climate policies, which collides with the need for tradable units in one country to be equivalent to tradable units in another country. To overcome this dilemma we propose a club of carbon-buying countries that would regulate only imported mitigation outcomes. We propose that private parties would be able, if permitted by the participating governments, to transfer any type of privately tradable emissions reduction unit across borders. But they would also be liable if the foreign units do not represent sufficient mitigation in the selling county. To bridge the period before final settlement, private parties would be able to borrow domestic compliance units, based on collateralising a certain amount of foreign units. |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:bre:polbrf:19951&r=reg |
| By: | Balázs Égert |
| Abstract: | This paper investigates the relationship linking investment (capital stock) and structural policies. Using a panel of 32 OECD countries from 1985 to 2013, we show that more stringent product and labour market regulations are associated with less investment (lower capital stock). The paper also sheds light on the existence of non-linear effects of product and labour market regulation on the capital stock. Several alternative testing methods show that the negative influence of product and labour market regulation is considerably stronger at higher levels. The paper uncovers important policy interactions between product and labour market policies. Higher levels of product market regulations (covering state control, barriers to entrepreneurship and barriers to trade and investment) tend to amplify the negative relationships between product and labour market regulations and the capital stock. Equally important is the finding that the rule of law and the quality of (legal) institutions alters the overall impact of regulations on capital deepening: better institutions reduce the negative effect of more stringent product and labour market regulations on the capital stock, possibly through the reduction of uncertainty as regards the protection of property rights. |
| Keywords: | aggregate investment, capital deepening, structural policy, product market regulation, labour market regulation, poliy interaction, OECD. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2017-17&r=reg |
| By: | Quentin Perrier (CIRED and ENGIE) |
| Abstract: | Following the first oil crisis, France launched the world’s largest ever nuclear energy program, commissioning 58 new reactors. These reactors are now reaching 40 years of age, the end of their technological lifetime. This places France at an energy policy crossroads: should the reactors be retrofitted or should they be decommissioned? The cost-optimal decision depends on several factors going forward, in particular the expected costs of nuclear energy production, electricity demand levels and carbon prices, all of which are subject to significant uncertainty. To deal with these uncertainties, we apply the Robust Decision Making framework to determine which reactors should be retrofitted. We build an investment and dispatch optimization model, calibrated for France. Then we use it to study 27 retrofit strategies for all combinations of uncertain parameters, which amounts to nearly 3,000 runs. Our analysis produces two robust strategies, which involve shutting down between 7 and 14 of the 14 oldest reactors, while extending the lifetime of all remaining reactors. These strategies provide a hedge against the risks of unexpected increases in retrofit costs, low demand and low carbon price. Our robust strategies differ from the official French government scenarios on the timing and number of reactors suggested to be decommissioned. They provide a timely contribution to the current debate on the extension of lifetime of nuclear plants in France. |
| Keywords: | Power System, Nuclear Power, Uncertainty, Investment Optimization, Robust Decision Making |
| JEL: | D81 O13 Q40 Q48 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2017.18&r=reg |
| By: | Julien Gourdon (OECD); James Messent (OECD) |
| Abstract: | A number of countries used discriminatory government procurement policies as part of stimulus packages designed to alleviate the effects of the global economic crisis. This paper collates and updates the evidence related to the size of procurement markets, the level of home bias they exhibit, and the effectiveness of multilateral and bilateral procurement agreements in reducing that bias. The share of procurement in GDP has been increasing gradually since 1995 with clear spikes during 2000-2002 and 2008-2010, the latter in response to the global economic crisis. The analysis presents evidence of domestic bias in government procurement markets, bias which has been increasing over recent years. The analysis in this paper suggests that the results of international efforts to address home bias in government procurement have been mixed to date. The World Trade Organisation's Government Procurement Agreement (GPA) is found to reduce discrimination in procurement markets, although available -- but limited -- evidence does not indicate a significant effect for bilateral agreements. The evidence suggests liberalisation of investment barriers undertaken in parallel with trade agreements increases the ability of those agreements to reduce discrimination. This suggests that countries negotiating procurement agreements could also benefit from negotiating investment agreements in parallel. |
| Keywords: | Auctions, Government procurement, Government Procurement Agreement (GPA), home bias, International Trade, preferential trade agreements |
| JEL: | D44 F13 F14 F15 F53 H57 |
| Date: | 2017–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:199-en&r=reg |
| By: | Tom Harris (DataFirst, School of Economics, University of Cape Town, South Africa); Mark Collinson (MRC/Wits University Rural Public Health and Health Transitions Research Unit (Agincourt)); Martin Wittenberg (DataFirst, School of Economics, University of Cape Town, South Africa) |
| Abstract: | We investigate household electricity access in a poor rural setting in South Africa, showing that the acquisition of connections is not the simple monotonic process often assumed in the literature. We argue that changes in household electricity access are a complex and changing outcome of two key time-varying processes: (1) net connections (new connections less disconnections) and (2) household formation and dissolution dynamics. In particular, we show that migration can occur in ways which either improves or worsens access. Even for households that stay in place we observe many disconnections. Therefore, in their efforts to improve access to electricity, governments in developing countries may in fact be aiming for a moving target – if the infrastructure is provided in places from which people are migrating, if many new households are being formed in un-serviced areas, or if existing connections are being lost. |
| Keywords: | Electricity access; energy; service delivery; household formation; South Africa |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ldr:wpaper:195&r=reg |
| By: | André De Palma (ENS Cachan - École normale supérieure - Cachan); Carlos Criado (Department of Economics, Université Laval - Université Laval); L Randrianarisoa (Sauder - Sauder School of Business [British Columbia] - UBC - University of British Columbia) |
| Abstract: | This paper analyzes rivalry between transport facilities in a model that includes two sources of horizontal differentiation: geographical space and departure time. We explore how both sources influence facility fees and the price of the service offered by downstream carriers. Travellers' costs include a fare, a transportation cost to the facility and a schedule delay cost, which captures the monetary cost of departing earlier or later than desired. One carrier operates at each facility and schedules a single departure time. The interactions in the facility-carrier model are represented as a sequential three-stage game in fees, times and fares with simultaneous choices at each stage. We find that duopolis-tic competition leads to an identical departure time across carriers when their operational cost does not vary with the time of day, but generally leads to distinct service times when this cost is time dependent. When a facility possesses a location advantage, it can set a higher fee and its downstream carrier can charge a higher fare. Departure time differentiation allows the facilities and their carrier to compete along an additional differentiation dimension that can reduce or strengthen the advantage in location. By incorporating the downstream carriers into the analysis, we also find that a higher per passenger commercial revenue at one facility induces a lower fee charged by both facilities to their carrier and a lower fare charged by both carriers at their departure facility, while a lower marginal operational cost for one carrier implies a higher fee at its departure facility, a lower fee at the other facility served by the rival carrier and a lower fare at both facilities. JEL Classification: D43, L13, L22, L93, R4 |
| Keywords: | Spatial asymmetry,Horizontal differentiation,Location model,Airline and facility competition,Service timing |
| Date: | 2017–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01448391&r=reg |
| By: | Alexandrov, Alexei; Pittman, Russell; Ukhaneva, Olga |
| Abstract: | Monopolists selling complementary products charge a higher price in a static equilibrium than a single multiproduct monopolist would, reducing both the industry profits and consumer surplus. However, firms could instead reach a Pareto improvement by lowering prices to the single monopolist level. We analyze administrative nationally-representative pricing data of railroad coal shipping in the U.S. We compare a coal producer that needs to ship from A to C,with the route passing through B, in two cases: (1) the same railroad owning AB and BC and (2) different railroads owning AB and BC. We find no price difference between the two cases, suggesting that the complementary monopolist pricing inefficiency is absent in this market. For our main analysis, we use a specification used by previous literature; however, we confirm our findings using propensity score blocking and machine learning algorithms. Finally, we confirm the results by using a difference-in-differences analysis to gauge the impact of a merger that made two routes wholly-owned (switched from case 2 to case 1). Our results have implications for royalty stacking and patent thickets, vertical mergers, tragedy of anti-commons, and mergers of firms selling complements. |
| Keywords: | Vertical mergers, complementary products mergers, railroads, end-to-end mergers, royalty stacking, patent thickets, Cournot, Coase |
| JEL: | D43 K21 L42 L92 O31 |
| Date: | 2017–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:78249&r=reg |
| By: | Cohen, James |
| Abstract: | Cohen argues that the rise of neo-liberalism in the U.S. framed the failure of attempts to implement high speed rail in Florida between 1981 and 2011. In the 1980's rail promoters attempted, but were unable to apply neo-liberal precepts of financing new lines solely from sources of private capital, such as real estate development. Subsequently, financing plans based on both public and private funds were defeated by neo-liberal governors and their allies in Congress. As a result, the only new passenger line that appears likely to begin operations in Florida in the near future, is Florida East Coast Railway's Brightliner, which will operate at between 79 and 125 miles per hour, on existing freight rights of way between Miami and Orlando, with a possible future extension to Tampa. Cohen explains why this moderate speed line is likely to succeed, where prior attempts at high speed failed. |
| Keywords: | High speed rail; railways; political economy; capital finance; financial history; neo-liberalism; Florida |
| JEL: | N2 |
| Date: | 2016–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:76765&r=reg |