nep-reg New Economics Papers
on Regulation
Issue of 2017‒04‒30
thirteen papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Privacy and Quality By Lefouili, Yassine; Toh, Ying Lei
  2. The Incidence of Carbon Taxes in U.S. Manufacturing: Lessons from Energy Cost Pass-through By Sharat Ganapati; Joseph S. Shapiro; Reed Walker
  3. The Rent Impact of Disclosing Energy Performance Certificates: Energy Efficiency and Information Effects By Luisa Dressler; Elisabetta Cornago
  4. Where Do Green Technologies Come From? Inventor Teams’ Recombinant Capabilities and the Creation of New Knowledge. By Orsatti, Gianluca; Pezzoni, Michele; Quatraro, Francesco
  5. An estimate of the possible impact of lower electricity and water tariffs on the Maltese economy By Aaron G. Grech
  6. Is the Answer Blowing in the Wind (Auctions)? An Assessment of Italian Auction Procedures to Promote On-Shore Wind Energy By Cassetta, Ernesto; Meleo, Linda; Monarca, Umberto; Nava, Consuelo R.
  7. Wind Providing Balancing Reserves: An Application to the German Electricity System of 2025 By Casimir Lorenz; Clemens Gerbaulet
  8. Auctions versus Negotiations By Herweg, Fabian; Schmidt, Klaus M.
  9. Citywide Effects of High-Occupancy Vehicle Restrictions: Evidence from the Elimination of "3-in-1" in Jakarta By Hanna, Rema; Kreindler, Gabriel; Olken, Benjamin A.
  10. Making Moves Matter: Experimental Evidence on Incentivizing Bureaucrats through Performance-Based Transfers By Khan, Adnan Q.; Khwaja, Asim Ijaz; Olken, Benjamin A.
  11. How Accurate are Energy Intensity Projections? By David I. Stern
  12. The Evolution of Health Insurer Costs in Massachusetts, 2010-12 By Ho, Kate; Pakes, Ariel; Shepard, Mark
  13. Surge Capacity: Selling City-owned Electricity Distributors to Meet Broader Municipal Infrastructure Needs By Steven Robins

  1. By: Lefouili, Yassine; Toh, Ying Lei
    Abstract: This paper analyzes the effects of a privacy regulation that caps the level of data disclosure on investment in quality and social welfare. We develop a model in which a monopolist offers a service for free to consumers with heterogeneous privacy preferences, and derives revenues from disclosing consumer data to third parties. We assume that the users of the service choose how much information they provide to the firm. In this setting, regulating the disclosure level can alter both the extensive margin effect and the intensive margin effect of an investment in quality. In the case where the market is fully covered, a welfare-maximizing regulator who can commit ex ante to a cap on disclosure level finds it optimal to do so when the complementarity between quality and information is not too strong. In the case where the market is partially covered, such an an ex ante disclosure cap may be socially desirable even when quality and information are strongly complementary. Finally, we extend our analysis to the case where the regulator maximizes consumer surplus, and to a scenario where the regulator sets a disclosure cap ex post.
    Keywords: Privacy Regulation, Data Disclosure, Quality.
    JEL: L15 L4 M21
    Date: 2017–04
  2. By: Sharat Ganapati (Dept. of Economics, Yale University); Joseph S. Shapiro (Cowles Foundation, Yale University); Reed Walker (University of California, Berkeley, IZA, & NBER)
    Abstract: This paper studies how changes in energy input costs for U.S. manufacturers affect the relative welfare of manufacturing producers and consumers (i.e. incidence). In doing so, we develop a partial equilibrium methodology to estimate the incidence of input taxes that can simultaneously account for three determinants of incidence that are typically studied in isolation: incomplete pass-through of input costs, differences in industry competitiveness, and factor substitution amongst inputs used for production. We apply this methodology to a set of U.S. manufacturing industries for which we observe plant-level unit prices and input choices. We find that about 70 percent of energy price-driven changes in input costs are passed through to consumers. We combine industry-specific pass-through rates with estimates of industry competitiveness to show that the share of welfare cost borne by consumers is 25-75 percent smaller (and the share borne by producers is correspondingly larger) than models featuring complete pass-through and perfect competition would suggest.
    Keywords: Pass-through, incidence, energy prices, productivity, climate change
    JEL: H22 H23 Q40 Q54
    Date: 2017–04
  3. By: Luisa Dressler; Elisabetta Cornago
    Abstract: Energy performance certificates (EPC) can help solve information asymmetries between landlords and tenants about dwellings’ energy performance. EPCs may enable rent premiums for energy efficient dwellings, incentivizing energy efficiency investment in rental property. However, low EPC disclosure rates may undermine their potential to promote investment. Using a cross-sectional dataset of residential rental advertisements from Brussels, we estimate rent premiums from EPCs under de facto voluntary EPC disclosure. We use the Heckman correction and an instrumental variable approach to tackle potential selection bias and endogeneity. First, we find that highly energy-efficient compared to inefficient dwellings earn a rent premium, provided that EPCs are disclosed (energy efficiency effect). This premium may incentivize investment in energy efficiency of rental property. Second, dwellings with average energy performance are penalized from disclosing an EPC (information effect). This may provide a strategic motivation to hide EPCs that indicate mediocre energy performance.
    Keywords: asymmetric information; voluntary information disclosure; energy performance certificates; energy efficiency
    JEL: C21 D82 Q48 R31
    Date: 2017–04
  4. By: Orsatti, Gianluca; Pezzoni, Michele; Quatraro, Francesco (University of Turin)
    Abstract: By exploiting the EPO universe of patent data, we investigate how inventors’ teams recombinant capabilities drive the creation of Green Technologies (GTs).Results suggest the importance of recombinant creation patterns in fostering the generation of GTs. We also find diverse moderating effects of technological green experience and environmental regulation stringency on exploration behaviors. Precisely, the positive effect of team’s explorative behaviors is magnified for teams lacking technological green experience, even more in regimes of weak environmental regulation. Conversely, the effect of explorative behaviors is reduced for green experienced teams, especially in regimes of weak environmental regulation. Finally, we find positive effects of both team’s previous technological green experience and environmental regulation stringency.
    Date: 2017–03
  5. By: Aaron G. Grech (Central Bank of Malta)
    Abstract: This paper presents estimates of the possible impact on the Maltese economy of the reduction in electricity and water tariffs to residential customers that took place on 31 March 2014 and the subsequent lowering of tariffs to commercial customers, which is expected to take place in March 2015. These estimates are calculated using the structural macro-econometric model described in Grech et al (2013).
    JEL: C3 C5 E1 E2
  6. By: Cassetta, Ernesto; Meleo, Linda; Monarca, Umberto; Nava, Consuelo R. (University of Turin)
    Abstract: The present article provides a quantitative data-based assessment of on-shore wind auctions implemented in Italy from 2012 to 2016. More specifically, this paper investigates policy effectiveness and cost effciency of on-shore wind auction scheme and explores the determinants of the likelihood of being awarded an incentive according to current auction design. Our objective is to provide new insights for better understanding of auction potential outcomes in RES context as well on the different design elements which are more appropriate for specific policy goals. The extreme simplicity of the auction design undoubtedly has promoted competition, encouraging many on-shore wind project developers to bid. Our results show that localisation factors have not constitute a competitive constraint for project developers. When many sites are available and auctioned capacity is not sufficiently high, the administratively setting of ceiling prices becomes a central issue. Doubts also exist on policy effectiveness of the current support scheme which makes difficult to control the totalamount of support provided justifying stop-and-go cycles of nancing thus favouring distorted bidding behaviour by project developers.
    Date: 2017–03
  7. By: Casimir Lorenz; Clemens Gerbaulet
    Abstract: This paper analyzes the influence of wind turbines as new participants on prices and allocation within balancing markets. We introduce the cost-minimizing electricity sector model ELMOD-MIP, that includes detailed unit-commitment constraints, complex combined heat and power constraints, and minimum bid sizes for balancing capacity reservation. The model also features a novel approach of modeling balancing reservation by considering possible activation costs already during the reservation phase, mimicking the activation anticipation of market participants. The model includes the spot and balancing market of Germany and is applied to scenarios for 2013 and 2025. The results for 2025 show, in comparison to 2013, a price increase for positive and negative reserves, in case no new participants enter the market. With the participation of wind turbines the cost for balancing provision is reduced by 40%, but above 2013 values. The relative cost savings from wind participation are higher for negative reserve provision than positive reserve provision, as wind turbines can use their full capacity if not activated and do not have to be curtailed ex ante. The participation of wind turbines especially reduces the occurrence of peak prices for positive and negative reserves in 2025. This reduction effect occurs even with a relatively low share where wind turbines participate with only five percent of their capacity. Therefore, further fostering the process of allowing wind turbines to participate in the German reserve market seems favorable.
    Keywords: balancing reserves, electricity sector modeling, power plant dispatch, wind participation
    JEL: Q42 Q47 Q48 C61 L94
    Date: 2017
  8. By: Herweg, Fabian (University of Bayreuth); Schmidt, Klaus M. (University of Munich)
    Abstract: For the procurement of complex goods the early exchange of information is important to avoid costly renegotiation. If the buyer can specify the main characteristics of possible design improvements in a complete contingent contract, a scoring auction implements the efficient allocation. If this is not feasible, the buyer must choose between a price-only auction (discouraging early information exchange) and bilateral negotiations with a preselected seller (reducing competition). Bilateral negotiations are superior if potential design improvements are important, if renegotiation is particularly costly, and if the buyer\'s bargaining position is strong. Moreover, negotiations provide stronger incentives for sellers to investigate design improvements.
    Keywords: Adaptation costs; auctions; behavioral contract theory; loss aversion; negotiations; procurement; renegotiation; ;
    JEL: D03 D82 D83 H57
    Date: 2017–03–25
  9. By: Hanna, Rema (Harvard University); Kreindler, Gabriel (MIT); Olken, Benjamin A. (MIT)
    Abstract: We use high frequency data on traffic congestion from Google Maps to measure the impact of Jakarta's main traffic congestion reduction policy, a high-occupancy vehicle restriction policy. We find that the unexpected lifting of the policy led to a large, sudden and persistent increase in travel delay during operating hours on affected roads, with delays rising between 45-85 percent. Surprisingly, this increase in traffic was not just substitution of traffic from unaffected roads to previously restricted roads. Instead, we find that the removal of the high-occupancy vehicle restriction led to worse traffic throughout the city, both on other roads that had never been restricted and during times of the day when there restrictions had never been in place previously. The results suggest that targeted restrictions on road use can have positive general equilibrium effects on traffic throughout the city.
    Date: 2016–12
  10. By: Khan, Adnan Q. (London School of Economics and Political Science); Khwaja, Asim Ijaz (Harvard University); Olken, Benjamin A. (MIT)
    Abstract: Postings are often used by bureaucracies, especially in emerging economies, in an attempt to reward or punish their staff. Yet we know little about whether, and how, this type of mechanism can help incentivize performance. Using postings to induce performance is challenging, as heterogeneity in preferences over which postings are desirable non-trivially impacts the effectiveness of such schemes. We propose and examine the properties of a mechanism, which we term a performance-ranked serial dictatorship, in which individuals sequentially choose their desired location, with their rank in the sequence based on their performance. We then evaluate the effectiveness of this mechanism using a two-year field experiment with over 500 property tax inspectors in Punjab, Pakistan. We first show that the mechanism is effective: being randomized into the performance-ranked serial dictatorship leads inspectors to increase the growth rate of tax revenue by between 44 and 80 percent. We then use our model, combined with preferences collected at baseline from all tax inspectors, to characterize which inspectors face the highest marginal incentives under the scheme. We find empirically that these inspectors do in fact increase performance more under this mechanism. We estimate the cost from disruption caused by transfers to be small, but show that applying the scheme too frequently can reduce performance. On net the results suggest that bureaucracies have tremendous potential to improve performance by periodically using postings as an incentive, particularly when preferences over locations have a substantial common component.
    Date: 2016–11
  11. By: David I. Stern (Crawford School of Public Policy, The Australian National University)
    Abstract: Recent projections of energy intensity predict a more rapid decline in intensity than has occurred in the recent past. To assess how well such projections have performed in the past, I assess the accuracy of the business as usual energy intensity projections embedded in the annual World Energy Outlook (WEO) produced by the International Energy Agency since 1994. Changes in energy intensity depend on economic growth and historical errors in projecting energy intensity can partly be explained by errors in projecting the rate of economic growth. However, recent projections of the elasticity of energy intensity with respect to economic growth probably overstate the likely future reduction in energy intensity even if economic growth is projected accurately. This could be because energy efficiency policies are not implemented as effectively as expected or because the economy-wide rebound effect is larger than modeling assumes.
    Keywords: Integrated Assessment Models, Business as Usual, Projections
    JEL: Q43 Q54
    Date: 2017–04
  12. By: Ho, Kate (Columbia University); Pakes, Ariel (Harvard University); Shepard, Mark (Harvard University)
    Abstract: We analyze the evolution of health insurer costs in Massachusetts between 2010-2012, paying particular attention to changes in the composition of enrollees. This was a period in which Health Maintenance Organizations (HMOs) increasingly used physician cost control incentives but Preferred Provider Organizations (PPOs) did not. We show that cost growth and its components cannot be understood without accounting for (i) consumers' switching between plans, and (ii) differences in cost characteristics between new entrants and those leaving the market. New entrants are markedly less costly than those leaving (and their costs fall after their entering year), so cost growth of continuous enrollees in a plan is significantly higher than average per-member cost growth. Relatively high-cost HMO members switch to PPOs while low-cost PPO members switch to HMOs, so the impact of cost control incentives on HMO costs is likely different from their impact on market-wide insurer costs.
    JEL: I11 I13 L10
    Date: 2017–01
  13. By: Steven Robins
    Keywords: Public Investments and Infrastructure
    JEL: E6 L3 R4

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